EY’s Santenac: AI use cases "will accelerate" in the reinsurance sector

Generative AI will “transform the industry” in many aspects, according to EY global insurance leader Isabelle Santenac.

A recent EY survey found that two-thirds of large insurers and reinsurers are working on AI use cases, with most CEOs expecting to realise cost benefits from using the technology, Santenac told The Insurer TV during the Rendez-Vous de Septembre in Monte Carlo.

According to Santenac: “It can help the underwriter to better price the risk and to save time. We see it in claims handling, with being able to detect fraud, and enabling much faster claim payouts.

“We’re also seeing it in finance and marketing, in how to create new products,” she said.

However, Santenac added a cautionary note: “You have new regulations in the EU, and you need to have strong governance. How do you want to use generative AI? How do you want to control it? Do you want to use it with your clients? There are also some legal consequences of that.”

Santenac added that chief risk officers (CROs) are also prioritising AI. "CROs want to ensure that they are part of the industry's transformation agenda, which means adapting their talent and maybe being closer to the business."

Addressing the protection gap

The executive also commented on the widening protection gap that leaves many catastrophe losses uninsured.

“Discipline in underwriting led to better profits for the industry, but it means the industry is consciously exiting some risks because they can’t price those risks well, or they don't know exactly how to tackle the risk,” she said.

“If insurers can't show they want to be active in reducing the protection gap, governments will force them to take risks they don't want to take. We’re seeing that now in Italy, where the government is mandating natural catastrophe coverage for businesses.”

She summarised: “We still need discipline in underwriting, but also need to meet clients’ expectations – and clients want more risk coverage.”

Santenac was keen to highlight that while recent profits point to a positive future for the reinsurance industry, there is no room for complacency – especially with an alarming increase in extreme weather conditions.

"We should not underestimate some of the emerging or increasing risks, such as cyber risk and climate change. We're seeing more hailstorms, maybe not as severe as big hurricanes, but much more frequent and with a high impact,” she said.

“A lot of people wonder whether hard pricing will continue to stay or not. I think there are many reasons to be very optimistic, but we need to continue to be disciplined, tackle the right risks, and meet the client's overall demand and expectation,” Santenac said.

Watch the 6-minute interview with EY’s Isabelle Santenac to hear more about: