The use of artificial intelligence (AI), including generative AI (predominantly large language models) and agentic AI (autonomous agents making decisions without human input), is expanding rapidly. The volume of commentary on AI’s impact on insurance is growing almost as fast. Most of this commentary to date has focused on the transformative power of the technology to improve efficiency and productivity, as well as reduce costs and streamline workflows within the insurance industry and beyond. This has positive consequences of higher margins, improved customer experience, and reduced waste. Clearly, there are also negative potential implications relating to employment and training prospects.
The purpose of this paper is to shift the conversation from the changes AI will have on insurance industry processes to the consequences AI itself will have in expanding, evolving, and shifting risk. Established paradigms for insurance products are being dismantled. Boundaries for coverage are blurred. The implications are wide-ranging, and our understanding of the risks is still limited. There is a myriad of different short- and long-term effects, both intended and unintended.
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