March 4, 2024

AI and prescriptive analytics for automated decision-making could drive the creation of more than $100 billion in new premiums, according to insurance and reinsurance brokerage group Aon.

artificial intelligence imagesThey see prescriptive analytics as the largest insurance and reinsurance megatrend opportunity today, accounting for more than half of the $200 billion in premium opportunities the broker sees among the top 10 transformative industry trends identified in the new report.

Aon describes prescriptive analytics as the application of machine learning artificial intelligence and data influx to deliver actionable insights, empowered to make automated decisions.

This has important implications for the insurance and reinsurance industry’s own operations and product opportunities.

Based on the overall AI market as a normative analysis metric, Aon estimates that the potential gross premium (GWP) associated with this could exceed $100 billion by 2030.

“The growing demand for data-driven decision-making and the adoption of big data and artificial intelligence technologies are driving market growth, but the technology is still in its infancy. Re (insurers) are focusing on improving operational efficiency rather than developing specialized insurance products to guard against related risks,” Aon explained.

However, this is also linked to multiple other trends, with Aon warning that “prescriptive analytics require careful consideration and planning by reinsurers/insurers to seize opportunities and mitigate risks.”

Commenting on the set of trends that could drive growth in the insurance industry, Aon Strategy & Technology Group Chief Executive Sherif Zakhary said: “These megatrends represent both risk and opportunity for the global insurance industry, so As risk experts, we cannot sit idly by.” Watch and wait for these trends to materialize. We have the technology and capabilities to anticipate the future landscape and develop innovative products and solutions that enable stakeholders to meet their greatest needs, from accessing new forms of capital to addressing emerging volatility. To accelerate this innovation, insurers must attract a broader pool of talent and leverage cutting-edge technologies, including advanced analytics. “

When it comes to specific uses in cases such as artificial intelligence and prescriptive analytics, the reinsurance and insurance-linked securities (ILS) community stands to benefit from improved risk selection, automation of portfolio management, improved hedging due to better data insights And benefit. Understand risk and use capital more efficiently.

In terms of underwriting, portfolio management and optimization, hedging, and risk trading, a deep understanding of the risks required to confidently make automated decisions can have enormous benefits for market participants and rewards for providers of capital.

There are many benefits to be gained from adopting advanced technology, and in trying to quantify some of these, Aon is helping to clarify the size of the risky market opportunity.

New premium opportunities from covering emerging risks is only one aspect, as the additional premium income that can be obtained through more efficient and optimized ways of working is likely to be equally important to the reinsurance and ILS markets in the coming years.

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