Some property/casualty insurers talk about experimenting with artificial intelligence to automate call center responses and back-office operations. But that’s not the road to turbocharging growth that AIG CEO Peter Zaffino envisions for his company.
AIG is all-in on AI that is directly focused on its core activities—underwriting and claims, Zaffino and Claude Wade, executive vice president and chief digital officer, told analysts during a four-hour Investor Day event late last month.
“We’re focusing on this as an end-to-end process—not on the fringes, [and] not just for expense savings,” said Zaffino, setting up a discussion of what the two AIG executives described as a strong “agentic AI ecosystem” where AI agent tasks involve data ingestion on one end of the underwriting process, all the way to figuring the propensity to bind on the other.
The ecosystem, which involves partnerships between AIG and well-known technology companies Anthropic and Palantir, will help AIG underwriters get through 500,000-plus E&S submissions to book at least $4 billion in new business premiums in the year 2030, Zaffino projects. Already, AI tools that are up and running in financial lines allow AIG to review 100% of every private and non-profit business submission that comes in, without adding underwriters, Wade said.
Anthropic CEO Dario Amodei and Palantir CEO Alex Karp praised Zaffino’s vision and leadership of AI initiatives for the insurer’s core activities of underwriting—already live for private and non-profit financial lines business, and in the works for claims processing—as they joined the AIG leader on stage for a half-hour panel discussion during the three-and-a-half-hour Investor Day event.
“Enterprises are having a lot of success deploying [AI] in the periphery,” said Amodei. “That’s common across all companies. All companies need customer service. They need internal productivity for their developers. That’s the same whether you’re in insurance or some other area. So, [there’s] a lot of success there, and a lot of aspiration to make progress in the core of what they do.”
Rather than experimenting with pilots, AIG has moved past aspirational goals, leaning into the core use cases, Amodei said. AIG “really had conviction on the claims cases and the underwriting cases, and has moved quickly to get a lot of this unstructured data [into the process] and really, really bet with conviction,” he said, noting that AIG started working with Anthropic when it’s AI Assistance Claude was Claude Version 2.1.
While AIG is now using Claude 3.5, it’s not a stronger AI model that is driving underwriting success for the carrier, Amodei said. “The technology can be great, but if there isn’t that conviction, if there isn’t that will to move quickly and that focus, it doesn’t happen,” he said.
“The real differentiator is not in the technology, as fast as that’s improving, but finding ways to deploy it in enterprises, finding ways to revolutionize an existing business,” Amodei said.
Palantir’s Karp also lauded Zaffino for starting to build the AI ecosystem ahead of the curve with a “singular and somewhat prescient focus” on that revolution of core business activities. Later, CNBC Analyst Sarah Eisen, who moderated the panel, asked Karp to talk specifically about what he had learned about AI applications for insurance.
Karp told her that insurance executives who ask, “Can AI outperform a human in what they do?” are asking the wrong question.
The right question is, “Can AI make one human [perform like] five humans?” he said, noting that in the case of underwriting, “the human is doing something very technical.”
“You have an expert who’s been trained in understanding not just data but proxy data … You’re looking at inferences for what it means based on years of experience,” he said. He drew an analogy to the analysts in attendance who can listen to executives of different companies saying the same thing to discern which will make money. Technical human underwriters have built similar abilities, he suggested.
“Can the large language model…make one human 10X more valuable, meaning they have 5X output in half the time?”
Getting to $4 Billion
Zaffino and Wade offered different numbers that would likely grab the attention of insurance industry peers, with Wade describing the measurable impact of AIG’s AI Underwriter Assistance on private and non-profit financial lines business, and Zaffino sharing his bigger vision of the growth of all E&S business for AIG’s Lexington.
According to Wade, with AI Underwriter Assistance already in use for North America private and non-profit business submissions:
- The underwriting timeline per submission has been slashed to less than one day, down from three or four weeks.
- The bind-to-submit ratio has increased from 15% to 20%.
- Data quality has increased more than 90%.
During his introductory remarks, Zaffino pulled back to create a bigger picture for E&S business growth. He reported that new business E&S submissions exploded to 300,000 in 2024 from 30,000 in 2018, with AIG’s Lexington binding just 2% (6,700) at an average new premium of $140,000—or roughly $1 billion total last year. Going forward, he expects a 10% compound annual growth rate in submissions, putting the total at about 500,000 new business submissions coming into Lexington in 2030.
“Can we keep doing 10% and stay with the industry on a CAGR basis? Absolutely we can. That would be very good by normal business standards. But I want to challenge us to think differently. I want to think about 20%-plus,” Zaffino said.
Envisioning that AI Underwriter Assistance can push the bind rate up to 6 percent in 2030 from 2 percent in 2024, the volume increases to $4 billion (assuming the same average premium), he said, reporting a premium volume figure in line with the 20%-plus per year aspiration.
“You get four times the amount of new business… And I think when we do that, it’s not going to be just adding volume, it’s going to be better risks,” he said with an excited tone. “I don’t even know what happens with the market. I can give you a view [which suggests] the 500,000 [submissions] will be light. We’re going to be able to bind more.”
“This is the direction we’re going. I give Lexington as an example because it is the one that is right there in front of us, but there’s a lot of other businesses with an AIG [where] we’re going to be rolling this out and adopting it. It’s for real. And for companies like us, I don’t believe this is a choice. We’re doing this. We have to do this and drive change,” he asserted.
This story is excerpt from Carrier Management, Insurance Journal’s sister publication. To read the whole post, click here.
Featured image: AI-generated/ Adobe Firefly
Topics
Excess Surplus
Underwriting
AIG
#Turning #Human #Underwriter #Turbocharging