Transforming Underwriting: Harnessing the Power of AI at a Critical Juncture
The U.S. commercial insurance market is showing distinct signs of rate fatigue and an overall softening. Since 2017, the industry has faced mounting loss pressures due to climate events, social inflation in legal judgments, and economic and political factors.
In response, insurance carriers have implemented substantial year-over-year rate increases to maintain profitability. However, there are indications that customers are becoming increasingly resistant to these changes.
In Q2 2024, the long-standing rate increases in the commercial property and casualty (P/C) market saw a shift, with commercial property rates declining by 0.94%—marking their first decrease. This initial decline has led to broader trends suggesting the market is beginning to soften.
Research from Alera Group and CIAB indicates that average premium increases across all account sizes fell from 4.2% in Q1 2025 to 3.7% in Q2 2025. Large account premiums rose by only 2.9%, a 45% drop from Q1 2025, while property premiums for Q2 2025 increased just 1.9%, reflecting an approximate 70% reduction compared to previous quarters.
Shifting Paradigm
The skills necessary for success in a softening market differ significantly from those required when rate increases are more prevalent. To remain profitable, carriers must focus on controlling expenses and enhancing the quality and discipline of their underwriting processes.
Traditionally, the industry has relied on process reengineering, offshoring, and underwriting training. However, with advancements in artificial intelligence (AI), including generative AI and agentic AI, there is a pressing need for a fresh approach to underwriting. The key to success will be those who leverage these tools to enhance underwriting discipline and efficiency.
From Legacy to Cutting Edge
Despite its evolution, the traditional underwriting function remains largely unchanged, heavily reliant on manual data collection and historical actuarial models. This legacy approach stifles innovation and limits data-driven decision-making. To stay competitive, insurers must adopt AI and generative AI to improve data ingestion, generate better insights, and enable more consistent and accurate pricing.
Modernizing isn’t just about technology; it’s about merging the best practices of traditional underwriting with the capabilities of AI. This fusion can help insurers navigate the current inflection point and maintain a competitive edge.
From Experimentation to Implementation
While the insurance industry has been experimenting with AI for several years, adoption has been inconsistent. However, a recent survey by Accenture, which included 430 senior underwriting executives across various sectors, reveals growing optimism. The data suggests that AI and generative AI adoption in underwriting is expected to surge from 14% today to 70% within the next three years.
Automating Non-Core Tasks
One of the primary advantages of AI is its ability to automate non-core tasks, enabling underwriters to concentrate on high-value activities. For example, AI can manage data collection, synthesis, and even provide underwriting advice. By breaking down underwriting into key decisions, AI can assist underwriters in making these decisions more consistently and effectively.
Applications like data ingestion can significantly reduce the time underwriters spend on administrative tasks, which currently consume over a third of their time. Automating these processes allows underwriters to focus on strategic and analytical work, such as risk evaluation and pricing.
For instance, QBE Insurance Group, a multinational insurance company, has already reaped the benefits of AI-powered underwriting solutions. These tools enable QBE to process 100% of submissions from brokers, significantly speeding up market response times. This is just one example of how AI can make a tangible difference in underwriting.
AI Is a Game-Changer
AI and generative AI are not merely buzzwords; they represent a transformative opportunity for insurers to revolutionize underwriting and maintain competitiveness. By addressing challenges such as rising costs, environmental risks, and regulatory scrutiny, insurers can create a more efficient and accurate underwriting process.
In a rapidly evolving market characterized by persistent cost pressures and complex environmental exposures, AI stands out as a game-changer. It’s not just about automation; it’s about fostering a resilient and adaptive underwriting function capable of thriving in any environment.
By embracing these advancements, insurers can navigate the current inflection point and emerge stronger and more resilient. The future of underwriting is promising, and AI is the key to unlocking its full potential.
Topics
InsurTech
Data Driven
Artificial Intelligence
Underwriting
The U.S. commercial insurance market is showing distinct signs of rate fatigue and an overall softening. Since 2017, the industry has faced mounting loss pressures due to climate events, social inflation in legal judgments, and economic and political factors.
In response, insurance carriers have implemented substantial year-over-year rate increases to maintain profitability. However, there are indications that customers are becoming increasingly resistant to these changes.
In Q2 2024, the long-standing rate increases in the commercial property and casualty (P/C) market saw a shift, with commercial property rates declining by 0.94%—marking their first decrease. This initial decline has led to broader trends suggesting the market is beginning to soften.
Research from Alera Group and CIAB indicates that average premium increases across all account sizes fell from 4.2% in Q1 2025 to 3.7% in Q2 2025. Large account premiums rose by only 2.9%, a 45% drop from Q1 2025, while property premiums for Q2 2025 increased just 1.9%, reflecting an approximate 70% reduction compared to previous quarters.
Shifting Paradigm
The skills necessary for success in a softening market differ significantly from those required when rate increases are more prevalent. To remain profitable, carriers must focus on controlling expenses and enhancing the quality and discipline of their underwriting processes.
Traditionally, the industry has relied on process reengineering, offshoring, and underwriting training. However, with advancements in artificial intelligence (AI), including generative AI and agentic AI, there is a pressing need for a fresh approach to underwriting. The key to success will be those who leverage these tools to enhance underwriting discipline and efficiency.
From Legacy to Cutting Edge
Despite its evolution, the traditional underwriting function remains largely unchanged, heavily reliant on manual data collection and historical actuarial models. This legacy approach stifles innovation and limits data-driven decision-making. To stay competitive, insurers must adopt AI and generative AI to improve data ingestion, generate better insights, and enable more consistent and accurate pricing.
Modernizing isn’t just about technology; it’s about merging the best practices of traditional underwriting with the capabilities of AI. This fusion can help insurers navigate the current inflection point and maintain a competitive edge.
From Experimentation to Implementation
While the insurance industry has been experimenting with AI for several years, adoption has been inconsistent. However, a recent survey by Accenture, which included 430 senior underwriting executives across various sectors, reveals growing optimism. The data suggests that AI and generative AI adoption in underwriting is expected to surge from 14% today to 70% within the next three years.
Automating Non-Core Tasks
One of the primary advantages of AI is its ability to automate non-core tasks, enabling underwriters to concentrate on high-value activities. For example, AI can manage data collection, synthesis, and even provide underwriting advice. By breaking down underwriting into key decisions, AI can assist underwriters in making these decisions more consistently and effectively.
Applications like data ingestion can significantly reduce the time underwriters spend on administrative tasks, which currently consume over a third of their time. Automating these processes allows underwriters to focus on strategic and analytical work, such as risk evaluation and pricing.
For instance, QBE Insurance Group, a multinational insurance company, has already reaped the benefits of AI-powered underwriting solutions. These tools enable QBE to process 100% of submissions from brokers, significantly speeding up market response times. This is just one example of how AI can make a tangible difference in underwriting.
AI Is a Game-Changer
AI and generative AI are not merely buzzwords; they represent a transformative opportunity for insurers to revolutionize underwriting and maintain competitiveness. By addressing challenges such as rising costs, environmental risks, and regulatory scrutiny, insurers can create a more efficient and accurate underwriting process.
In a rapidly evolving market characterized by persistent cost pressures and complex environmental exposures, AI stands out as a game-changer. It’s not just about automation; it’s about fostering a resilient and adaptive underwriting function capable of thriving in any environment.
By embracing these advancements, insurers can navigate the current inflection point and emerge stronger and more resilient. The future of underwriting is promising, and AI is the key to unlocking its full potential.
Topics
InsurTech
Data Driven
Artificial Intelligence
Underwriting
