Record highs on the technology stock markets, political pressure on health insurers and flexible on-demand policies are all evidence of this: The insurance industry is undergoing a structural reorganization. The latest LBC Insurance Radar makes it clear that competition is no longer just about innovation, but about the ability to make artificial intelligence controllable.
The recent highs on the Nasdaq and S&P 500 are more than just stock market news. Driven by expectations of computing power, semiconductors and large technology companies, the market is signaling that AI-based business models will dominate in the long term. For insurers, this means rising expectations of automation, efficiency and data-driven decisions. At the same time, there is growing pressure from platform providers who increasingly see insurance as an integrated component of digital services. AI is therefore becoming not just a tool, but a competitive factor.
Politics as a risk driver
The healthcare sector developed quite differently. Share price losses by large US health insurers following regulatory decisions show how strongly business models depend on political conditions. Insurance valuations are increasingly based less on actuarial figures and more on regulatory perspectives. Political risk analysis is thus becoming part of corporate strategy, and pricing is increasingly dependent on possible changes in legislation. The traditional distinction between the market and political environment is disappearing.
New products through data
An example from São Paulo shows what innovation can look like in practice. Motorcycle couriers there are only insured during their actual working hours, activated via platform data. This reduces insurers’ exposure to claims, while at the same time significantly reducing premiums for drivers. Risks that were previously almost impossible to calculate are now insurable thanks to real-time data. Insurance is evolving from a static annual contract to a situational service.
Fraud goes digital
At the same time, a new category of loss is emerging. AI-supported fraud uses deceptively real voices or messages from executives to trigger transfers. The technical attacks are less decisive than organizational weaknesses. Trust, which used to be based on personal identification, is becoming less important. For companies, cyber security is thus shifting towards governance and process control, and insurability is increasingly dependent on internal control mechanisms.
Liability without a clear polluter
Autonomous AI is changing the logic of risk even more fundamentally. Systems make decisions independently and interact with each other, blurring responsibilities. The question of whether operators, developers or users are liable will become the central topic of future cover concepts. Traditional product or professional liability is no longer sufficient because the cause of the damage and the decision-making authority can no longer be clearly assigned.
AI governance as a competitive advantage
The actual core of current developments therefore lies in the management of the technology. AI is becoming the task of management and the board of directors. Comprehensible decision-making logic, documented processes, clear responsibilities and regulatory compliance are crucial. Companies that establish such structures early on not only meet regulatory requirements, but also create trust among customers and partners.
Conclusion
The industry is moving from a question of innovation to one of control. In future, insurers will compete less on the use of AI than on the ability to make their decisions explainable and reliable. The sustainable competitive advantage will therefore not come from the most powerful technology, but from its credible governance.
Binci Heeb
Read also: LBC Insurance Radar 8: Risk management, competition, AI and regulation
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