Artificial intelligence will support skilled brokers and underwriters rather than undermining their role, and technology may also have implications for capital flows and the premium cycle, a Finity seminar heard this week.

Berkshire Hathaway Specialty Insurance head of Australasia Mark Lingafelter said the complexity of the risk landscape for mid-sized and larger business probably supports a future where “superskilled brokers” retain the strength of their position, assisted by tech.

“Likewise, they’ll be working with superskilled underwriters that are also able to bring tools, both in terms of operational efficiency and pricing,” he said during a panel discussion at the commercial lines seminar, titled Rewired: The Age of Intelligence.

IAG Intermediated Insurance Australia CFO Christa Marjoribanks told the seminar AI will probably improve the claims experience for customers and speed processes.

“It’s not going to replace brokers. What it will replace is a lot of old-fashioned manual underwriting activity at the lower end and it will improve efficiency,” she said.

Munich Re Specialty head of global markets Australia Chris Mackinnon said AI will sharpen monitoring and management of risk and capital, and enable brokers “to really add value in terms of client advocacy and negotiation and understanding their clients’ risks.

“It will allow the underwriters to really focus on the technical underwriting aspects rather than the administrative functions that tie up so many people across our industry.”

But he predicted AI will fall short on driving innovation around emerging risks, where a lack of historical experience exists, and human capabilities are needed in those conversations.

Mr Mackinnon also said technology may help smooth and shorten market cycles, while data capabilities have taken underwriting from “being sort of a dark art” to a science.

“Using technology, people can adapt their pricing models very quickly based on data that's available,” he said. “I think we won’t see the huge peaks and troughs that we’ve seen over my career span, but we will continue to see a steady wave.”

Hutch COO and chief underwriting officer Dominique Vagi said, in the past, agencies were established for complex risks and niche areas, but tech has enabled more of them to pursue homogenous risks where there is also more straight-through processing.

“If you’re doing the straightforward and automated risk assessment and pricing, then it’s about your service to the brokers, and how you’re enabling the brokers,” she said.

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From the latest Insurance News magazine: The industry's tech experts discuss their hopes and fears as the AI revolution gathers pace

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