This is part 2 in a two-part series covering the growth of specialty programs.
In part 1 of this series, Insurance Business looked at the factors driving demand for niche insurance programs crafted by managing general agents (MGAs), and the hurdles these companies face amid increasing competition.
Part 2 will explore the impact of artificial intelligence (AI), specifically generative AI (gen AI), on the already fast-paced sector, and the growing challenge posed by a talent crunch across the wider insurance industry.
The integration of AI has brought significant benefits in insurance, notably in claims automation, processing, and efficiency. AI can speed up the process from filing to settlement faster than ever before, and this improved speed often comes with greater accuracy.
MGAs have embraced the rapid jump in AI capabilities but, like carriers and brokers, have been cautious over its negative impacts, such as data privacy issues and cybersecurity vulnerabilities.
“I think AI can create a lot of efficiencies and synergies within the operations side of the insurance business,” said Ray Hannan, chief underwriting officer at Westfield Specialty. “Any repetitive task is a potential opportunity to deploy AI and change how we do that task in the future.”
For Manuel Almenara, vice president of carrier relations at vQuip, it’s still unclear which AI capabilities will alter the landscape for MGAs. However, he said one application showing promise is policy form comparison.
He noted that AI tools can now process policy documents and extract details on coverage, exclusions, and conditions with high accuracy, significantly reducing the need for manual review and saving considerable time.
“There are many potential use cases for AI in this space, but challenges remain, especially in the specialty market where data availability can be limited,” Almenara said. “Unlike admitted markets like personal auto insurance, which have vast data sets spanning decades, specialty markets often lack such comprehensive information.”
The next step for program managers is to build valuable data sets within their areas of expertise and use AI to develop customized risk models, he added.
Technology providers and consultancy firms like Martin & Company are also highly aware of AI’s disruption in the program space. Paul Martin, founder and CEO of Martin & Company, told Insurance Business that developing tech-enabled solutions to “provide greater visibility and transparency for clients” has been a major priority.
“While we are actively monitoring AI developments, we are also engaging with the MGA space to understand their needs and determine how we can help,” said Martin. “Our technical department is focused on advancing solutions to support those needs, though we’re still figuring out the optimal role AI will play in this process.”
Jackie Cermola, vice president of business development, specialty insurance at Patra, which provides technology-enabled insurance outsourcing, underscored the importance of ensuring consent and transparency with AI technologies to maintain trust with clients.
She said “over-reliance on automation” can pose issues, potentially leading to errors and missed nuances in complex claims or underwriting decisions.
“Human oversight, empathy, and judgment are essential,” Cermola said. “Fully automated systems can frustrate customers, especially when handling sensitive issues like claims denials, where context and emotion are key. For successful AI implementation, insurers must strike a balance: leveraging AI’s strengths while maintaining transparency, accountability, and fairness.”
AI has also brought the talent shortage into the spotlight. The rapid integration of AI has transformed how the insurance industry operates. AI tools have been seen to alleviate some of the pressure of the talent gap through automation, but not necessarily to replace skilled insurance professionals.
“I think people have gotten past the idea that AI technology is going to replace underwriters, and they’re now embracing technology advancement as a complementary tool to be used by our underwriters,” said Bill Evans, co-president of Ryan Specialty National Programs.
However, the insurance industry is set to lose around 400,000 workers by 2026, many of them retiring, according to data from the US Bureau of Labor Statistics. Some leaders see technology and AI as a means to attract younger generations into insurance.
“We need to fill that pipeline with new people and educate them on the opportunities to have a diverse and satisfying career in insurance,” said Chris Kelleher, co-president of Ryan Specialty National Programs. “Data analytics and AI development should entice a lot of folks into joining the industry.”
Shawn Woedl, CEO of ReInsurePro, a program manager specializing in real estate insurance, said AI could help dispel outdated notions of insurance as an “old-fashioned” industry.
"Often, people view insurance as just home and auto, or even dull—but we’ve developed exciting, innovative solutions, especially in the program space,” said Woedl. “As an 'insurance nerd', I find it rewarding to attract high-quality talent, keep them engaged, and make them happy by offering more than just a job, but a proactive, fulfilling environment. It's been a fun challenge."
At last month’s Target Markets Annual Summit, carriers expressed a keenness to expand their specialty offerings by working with MGAs.
“We're looking to work with those program managers that have something that would be difficult for us to duplicate ourselves, whether that's a specific technology or underwriting expertise, or a distribution mechanism that we might not have access to, that's where we see programs offering us the biggest return on investment,” said Hannan.
Despite the challenges presented by AI and the talent shortage, there remains immense optimism in the promise of specialty insurance programs.
“The opportunities for PAs, along with their relationships with carriers and reinsurers, are impressive,” said Martin. “As long as they can secure capacity, it’s thrilling to see the program space continue to grow. It’s truly a well-oiled machine.”
What are your thoughts on the growth of the MGA market? Please share your comments below.
