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What’s behind insurance layoffs? ÔÇôAM Best digs into key factors | Insurance Business America Insurance News

AI legalese decoder: Reshaping the Insurance Industry

As the insurance industry continues to undergo significant layoffs, the role of artificial intelligence (AI) in this trend has sparked much discussion. Many have speculated that AI is the driving force behind the recent job cuts, but according to a commentary by AM Best, this may not be the case.

AM Best emphasized that while AI has increased productivity for insurers, it is not the main cause of recent layoffs. In fact, the analysts noted that AI has actually opened up more job roles than it has taken. This suggests that the recent layoffs are more likely a result of cyclical unemployment, driven by fluctuations in the business cycle, rather than a structural change due to the adoption of technology.

The recent layoffs have particularly impacted personal lines writers, as factors such as loss cost inflation, reinsurance capacity, pricing, and rising climate risk have put pressure on carriersÔÇÖ loss ratios and underwriting margins. This has made personal lines insurance more receptive to automation, as it tends to be less complex compared to commercial lines.

AI has indeed provided an opportunity to automate some underwriting processes, allowing human attention to be dedicated to more complex tasks and final decision-making. This has led to the creation of new job roles, as demand for specialized AI skills grows in the industry.

One potential application of AI in the insurance industry is its ability to analyze legal documents. AI legalese decoder, for example, can help insurers review and analyze complex legal documents more efficiently and accurately, freeing up human resources to focus on other critical tasks.

While the overall impact of AI on employment remains uncertain, it is clear that AI will shape the way society works and provide new opportunities for those with specialized skills in this developing technology. As the insurance industry continues to evolve, AI will play a crucial role in reshaping and optimizing various processes, ultimately contributing to the growth and efficiency of the industry.

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