AI solves two key challenges for E&S companies

The E&S market is growing, and there are no signs of a slowdown. With increased capacity comes two major hurdles. The first is a prioritisation issue: more emerging risks mean companies need to focus their efforts on the right ones. They’re also faced with a talent crunch – how can they develop enough human resources to service growing client expectations?

That’s where technology comes in. By using AI and other solutions, E&S insurers can better predict which risks will require innovative products while supplementing the capabilities of their current teams.

Better predictions, better answers

Drones, electric vehicles and cyber attacks were not even on most insurers’ radars just a short time ago. Often known as innovators, E&S players have changed the game by identifying new risks and creating specialised products to address unmet needs. But finding the next big thing – predicting market acceptance and the claims experience – can be challenging. How can E&S insurers ensure they’re focused on the right areas?

While E&S insurers can take on new risks, money is finite, and it’s important to prioritise their efforts. However, the risks are often new and changing rapidly. Consider the evolving risks related to environmental and cyber insurance, for example. Severe catastrophic weather events are popping up in every area of the world. Cyber attacks are also getting more sophisticated, and new exposures are regularly identified.

E&S insurers have been using data for years to help improve predictions. Reinsurers look for E&S insurers to supplement data with third-party information to identify markets for new products and anticipated claims experiences.

With generative AI, E&S insurers can make more advanced predictions with their data and create forward-looking risk models. For example, when determining property risks for catastrophic events, they can utilise aerial and satellite imagery coupled with loss history to create advanced models.

They can also use AI to analyse the outcomes of claims events and determine if there are new risk areas that require coverage. Consider the recent Baltimore bridge catastrophe. Will a new insurance market emerge for ships travelling through high-risk transportation routes such as the Suez or Panama Canal? Generative AI capabilities can provide more insight into what emerging risks will have the most impact and what scenarios could allow insurers to create products with the most impact.

Capitalising on Innovation

It’s no secret that the insurance industry has a talent shortage. Many in the current workforce are retiring, and not enough new people are entering the industry to fill the void. This problem is accelerated in the E&S market, as it demands a specialised skill set that requires training. The biggest hurdle to securing new talent is often overcoming the perception problem.

Insurers improve the industry image by capitalising on technology and putting it front and centre. As innovators, E&S insurers enable advancements like electric cars and wearable technologies by providing insurance for such developments. E&S insurers are often agile and embrace technology in their operations. By highlighting how insurers use AI and other advanced technologies within their operations, they can dispel the myth that insurance is outdated.

In addition to helping attract new talent to the sector, technology can also assist E&S insurers in increasing the productivity of their teams. By partnering with solution providers, more routine underwriting and claims tasks can be automated, leaving team members more time to focus on complex assignments. Generative AI can pull information from PDFs and other documents and complete forms or answer risk questions, speeding up the underwriting process. In claims, AI tools enable virtual property assessments and automate communication between adjusters and the insurer, allowing the claim to be processed faster.

The E&S market is expected to continue growing and to keep up, insurers will need to focus on the right areas and have the people power to service the growing number of clients. With generative AI, organisations can gain better insights, streamline processes to make current teams more efficient and attract the next innovators to the sector.

By Sachin Kulkarni, head of commercial & specialty insurance and MGA, Americas at Xceedance