The pace and scale of change brought by artificial intelligence (AI) and generative AI to insurance have been remarkable. While previous technological trends like blockchain saw limited adoption beyond niche areas, AI is increasingly a part of the insurance ecosystem.
Carriers are ramping up the adoption of AI tools into underwriting, claims, and other operational processes. Experts from Duck Creek Technologies noted a shift underway among commercial insureds that could present new challenges as well as opportunities for insurers.
"One interesting shift is the way a more personal-lines mindset is creeping into commercial insurance,” said Matthew Priestley (pictured left), director of solution architecture at Duck Creek. “(Commercial) clients now expect greater transparency, online access to their products, and control over their data. It’s becoming a much more personalized experience.”
As AI becomes more integrated into commercial lines underwriting, commercial insurers must address several hurdles, such as data complexity and segmentation, which make it more challenging to train effective AI models, and regulatory requirements around pricing transparency.
At the same time, Priestley said incorporating AI means carefully balancing art – human expertise and judgment – and science in underwriting.
"It's really about using underwriters' knowledge, skill sets, and data to train AI models. Commercial underwriting has always been a balance of art and science, with underwriters relying on deep expertise,” he told Insurance Business. “As AI becomes more integrated, it shifts more toward the science side, but the key is ensuring it supports underwriters rather than replacing their judgment.”
Commercial insurance is not quite at the same level of AI adoption as in personal lines. The complexity of commercial risk makes automation increasingly challenging. This tension has become more pronounced as many lines of business, such as marine or commercial auto, have grown more intricate with risks like extreme weather, geopolitical instability, and cyber threats.
"The interesting challenge is that as insurance becomes more complex, people want simpler solutions,” said Johan Nelis (pictured right), director, solution consulting, Asia Pacific at Duck Creek. “How do you keep it as straightforward as possible while addressing risks like climate change?”
One approach, Nelis said, is breaking insurance into smaller, manageable components. Componentized insurance allows different elements of coverage to be mixed and matched to fit specific needs. Businesses demand customization without the burden of navigating an overly complex process, and this is where AI can play a significant role in commercial lines.
“True simplicity isn’t giving everyone the same product,” Nelis said. “Instead, the goal is to make insurance easy to use while layering in sophistication beneath the surface.”
But Priestley stressed that the focus remains on augmenting commercial underwriters, not replacing them, with AI.
"It's very much about looking to crunch those amounts of data, help them come through pricing decisions quicker, and to get more volume into what was the most interesting thing or a point of discussion," he said.
One area where AI technology is quickly making waves is risk management. The Duck Creek experts highlighted how AI and the Internet of Things (IoT) are providing more ways to track and mitigate risks before they turn into costly claims.
The increasing unpredictability of risks in commercial lines due to factors like climate change and cyber losses is making risk management an expectation among insureds rather than an optional service. In marine insurance, for example, tracking cargo and monitoring ship conditions can prevent catastrophic losses.
“The focus is shifting from simply covering losses to actively reducing risk," Priestley said. “This includes ensuring proactive measures—like monitoring ship repairs in ports—to prevent major losses.”
Affordability is another growing concern. Rising premiums are forcing businesses to reconsider their coverage, and many are opting out altogether.
"Smarter solutions, like parametric insurance or flexible pricing models, could help,” Nelis said. “For example, allowing customers to set a budget and then tailoring coverage accordingly, based on their specific risk profile. This approach would give people more control over their insurance options.”
Traditional underwriting models don’t always accommodate the financial constraints of policyholders, and through AI and technology, the industry is opening up to alternatives. The most exciting part of this transformation, according to Nelis, is the ongoing refinement of processes.
"What was once highly manual is now driven by data and automation. The challenge for underwriters is to continually refine their processes, embedding improvements over time,” Nelis said. “Our CEO, Mike Jackowski, calls this the ‘jeweler’s screwdriver’ – a mindset of constant, precise enhancements rather than just executing tasks."
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