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When an AI Calls, Who Should Answer?

Blocking Meta's AI agent on your website won't stop it from calling. Insurers need a plan to handle these calls.

Insurance

A consumer's AI agent can now call an insurer and ask for a quote. The possibility of such calls leaves carriers with two bad options: putting a licensed person on the line with a machine, or risk hanging up on a real person.

Both options are wrong. There's a third.

The AI phone calls are already happening. Reuters reported that people using Meta's Muse, the personal AI agent launched in the U.S. this past September, can have it call businesses to book appointments, check inventory or get quotes from contractors. A Meta employee testing this feature said an insurer kept hanging up on Muse after realizing it was an AI caller.

At InsureTech Connect in Las Vegas, Steve Rullo, who is Guardian Life's chief digital and technology officer, told Insurance Business, "We are already seeing providers calling in for verification of benefits with AI." He described healthcare providers using AI to verify patient benefits, often for an entire list of patients in a single call.

The Debate Is About Websites

Since Muse launched, carriers and marketplaces have been deciding whether to allow it access. Insurify quickly blocked Muse, saying it "risks stripping carrier quotes of critical contextual information." Co-CEO Giorgos Zacharia explained, "A quote without its context is not a fair comparison. It is a number."

Shortly afterward, Kin announced that it would let Muse crawl its site so customers can shop for quotes, and Zebra announced an integration the following day. Employers, a workers' compensation insurer, told Dig-In it doesn't allow third-party AI agents like Muse to access its operational systems or customer data.

Each of those decisions is about access to a website or system. None of them covers phone calls, and blocking Muse online won't stop it from calling. I expect insurers will get a lot more of these calls. Handled the old way, they're a cost. Handled well, every one is a quote in front of a real shopper. That's where the real opportunities are.

The Talking Is About 5% of the Value

The answer is simple: AI for AI, humans for humans. Let AI answer calls from other AI, and let people answer calls from people. This way, a family dealing with a flooded basement won't be stuck on hold while a licensed agent talks to a bot.

Most voice AI answers the phone, then sends the caller through a phone menu or to a person. That's 5% of the value. The other 95% is the work behind the call: pulling up the policy, filing the claim, writing the result back to the core system. If AI can handle a machine caller's request at this level, no person needs to pick up, and licensed people can focus on judgment calls, like denied claims.

Most carriers aren't there yet. According to KPMG International's report Unlocking AI value in insurance, only 29% of respondents use AI agents or automation for end-to-end processes. Rullo said Guardian will keep people involved in its AI processes: "We'll still have a human in the loop." For some risk profiles, he said, Guardian wants alerts on exceptions instead of reviews of every transaction.

People should own the decisions. They shouldn't have to answer every call.

You Can't Always Tell Who Is Calling

Carriers also can't always tell if a caller is a machine or a person. Reuters reported that Meta tested having human contractors make some Muse calls without telling the other party. A Meta vice president said the test without proper disclosures "was a miss," and Reuters said Meta has rolled back that test for now. So a call that seems to come from an AI agent might actually be from a person. Zacharia told Dig-In that Muse got around Insurify's bot detection and didn't identify itself.

A system designed to resolve requests can help both human and AI callers. A system that only routes calls can't.

Policyholders Already Draw the Line

In Liberate's September survey of 1,001 U.S. claimants, 50% said they would prefer a claim paid in 60 seconds with no human contact over talking to a person within 10 minutes and getting paid in three days. Another 41% preferred a person on the phone. Of those who chose the fast payout, 55% still want a human involved in every denial. 

Fast on yes. Human on no. 

Across the whole survey, 61% say a human must review every denial. In the same survey, 86% want to be told when AI touches their claim.

A Hi Marley survey of 550 senior property and casualty decision-makers and 2,000 policyholders in the U.S. and Canada highlights the gap carriers need to close. Eighty-five percent of executives think AI will build customer trust, but only 40% of policyholders agree. Ninety percent of policyholders said it's very or extremely important to know when they're interacting with AI, and two-thirds said their biggest worry is not being able to reach a human when it matters.

Three Rules for Carriers

First, use insurance-specific AI that works within your core systems to answer calls from machines. Sending a bot to a phone menu or a person wastes time and doesn't solve the problem.

Second, keep a licensed person on every denial, no matter what else the AI handles.

Third, be transparent about AI on both sides. Let people know when they're talking to AI, and expect AI callers to do the same.

If carriers follow these rules, they can answer every call, whether it's from a person or an AI. The shopper using a machine gets a response, and the family with a flooded basement gets to talk to a real person. Insurance has always wanted to answer everyone who calls. Now it can.


Amrish Singh

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Amrish Singh

Amrish Singh is co-founder and CEO of Liberate, which builds insurance-native AI agents for P&C carriers and agencies. 

He previously spent nearly four years in back-office operations and technology at Metromile.

Insurers Await AI Integration in Core Platforms

Insurers aren't avoiding AI due to fear—they're waiting for core platform vendors to deliver native capabilities instead of risky integrations.

Insurance

We've all heard some version of the same story this year: Many carriers and brokers are still on the fence about AI because of regulatory risk, errors and omissions (E&O) exposure, or "black boxes" they can't explain to a state department of insurance (DOI) examiner.

All of this is true. But none of it tells the whole story.

Spend time with almost any carrier's IT and operations leaders, and eventually they'll say the quiet part out loud: They're not avoiding AI; they're waiting for it to arrive inside the systems they already run. Those systems are the core platforms, such as Duck Creek, Guidewire, Majesco, Sapiens, and Insurity, that sit beneath a large share of the policies and claims on the books today.

The Real Bottleneck Isn't Fear. It's Architecture.

For most carriers, policy, billing, and claims data live in a core system: a multi-year, multimillion-dollar investment that the business treats as its "single source of truth." The vendor varies from carrier to carrier, but the obstacle their IT teams face is the same.

Bolting a standalone AI tool onto that architecture, even an elegant and streamlined one, isn't a plug-and-play decision. It's a multi-team integration project that typically stretches across several quarters, exposing the organization to delays, cost overruns, and shifting priorities. One claims technology vendor estimates that AI vendors lose roughly 40% of their projected timelines to integration complexity, whether the carrier runs Guidewire, Duck Creek, Majesco, or a custom legacy core.

That kind of complexity is often the difference between a pilot that launches and one that quietly dies in the backlog.

Naturally, carriers also scan the standalone AI market. They see dozens of point solutions for underwriting triage, claims scoring, and first notice of loss (FNOL) intake, and wonder: "Why integrate a third-party layer today when the core vendor is about to deliver the same capabilities natively?"

It isn't a hypothetical question. Nearly every major core platform vendor is moving to close this gap. Consider a few examples:

  • Duck Creek launched its Agentic AI Platform in April 2026.
  • That same month, Guidewire embedded ProNavigator, an AI assistant that gives adjusters context-specific guidance, into ClaimCenter and its other core applications. In August, Guidewire followed with its Qusar release, which added Guidewire-built claims and underwriting agents, including an agentic FNOL tool.
  • Majesco announced that it's quadrupling its AI investment in 2026 to build an AI-native P&C platform and expand Majesco Copilot and its agentic AI capabilities.
  • Sapiens has been rolling AI-based functionality into its CoreSuite releases.
  • Insurity has committed an additional $100 million over two years to embed AI in its core systems, on top of the more than $50 million it had already invested in AI and R&D.

In each case, the pitch is essentially the same: The AI isn't a separate purchase; it's part of the system carriers already pay for.

That point is missing from many of the "why insurers are hesitant" stories in the media. Carriers aren't approaching AI cautiously simply because they're risk-averse. They're using their position as large, long-term platform customers to create a buyer's advantage. That leverage lets them be deliberate about their "build-versus-buy-versus-wait" calculations—and for many carriers, waiting has so far proved the more disciplined option.

Why Waiting Is a Deceptively Difficult Decision

The problem is that waiting has a cost, too, and that cost doesn't fall evenly. One AI underwriting vendor that sells a core-agnostic product has argued that carriers and managing general agents (MGAs) can't afford to wait for a full core system transformation before deploying AI and can't afford to be locked into a tool that works with only one platform.

Both concerns are valid, which makes waiting a strategic bet rather than an obvious answer.

There's also a quieter signal that undercuts the "carriers are simply being cautious" narrative. A May 2026 IA Capital Group survey of national and regional carriers found OpenAI's models in 91% of respondents' AI stacks, often delivered through Microsoft Copilot. Carriers aren't AI-averse. They're AI-selective, using their scale to adopt productivity tools quickly while holding the line on systems of record until their core vendors catch up. For many of them, that moment has either arrived or is very close.

The Exception That Proves the Rule

So why do carriers buy standalone tools at all? Because when a tool solves a problem that general-purpose AI, or the AI now arriving in core platforms, doesn't handle well, the calculus flips.

That's where most insurance-specific AI vendors stake their pitch: not "we're AI," but "we're AI trained on insurance data and workflows, which a horizontal model wrapped around your files isn't." It's an argument that still holds water. Shift Technology has made this case to carrier IT leaders directly, arguing that generic horizontal AI players often lack the data foundations and expertise needed to move a pilot into production. It's a real distinction, not just positioning. A general-purpose model can summarize a claims file. Reasoning reliably across coverage language, state-specific regulations, and loss histories is a different problem, and it's one that a system trained specifically on that data is, at least in theory, built to solve.

What sustains the "insurance-specific always beats generic" argument, then? The products carriers keep buying from these vendors, despite their preference for waiting until such capabilities arrive inside a core system, share one trait: They're widely believed to do the job better because of deep domain training, proprietary data, or a workflow too specialized for a core vendor to prioritize anytime soon.

Everything else, such as a general chat interface bolted onto a claims queue, is the kind of functionality most likely to show up natively in the next core release, whichever vendor delivers it. That's why carriers aren't rushing to pay for it twice.

What This Means If You're Evaluating Tools Right Now

A few things are worth doing before you sign anything:

  • Separating "edge" AI from "core" AI. Marketing copy and service-desk triage carry low regulatory exposure and can run successfully on general-purpose tools today. Underwriting and claims determinations that touch policyholder outcomes are a different risk category, where the wait-for-native instinct makes more sense.
  • Asking vendors for proof of successful integrations, not just a demo. A clean demo says nothing about how a tool behaves once it's wired into a decade-old core system. Ask for a named carrier reference on your exact platform and version.
  • Pushing for a real audit trail. If a vendor can't produce output in a format that your internal compliance team and state DOI examiners would accept, that's a governance gap that will surface at the worst possible time.
  • Ensuring pilot programs don't require a multi-year lock-in. Any AI vendor worth considering should be comfortable running a three- to six-month pilot on a limited book of business before asking for a long-term commitment.
  • Watching your core vendor's product roadmap as closely as the pitch deck. If your platform vendor plans to deliver the capability you're evaluating in its next release cycle, that changes the decision, even if the standalone tool works well today.
  • Testing whether the value is domain-specific. If a vendor's edge could be replicated by connecting a general-purpose model (for example, an enterprise assistant such as Microsoft Copilot, or an AI workflow that retrieves and summarizes documents) to your own policy forms, endorsements, claim files, and underwriting guidelines, don't count on that edge lasting once your core system catches up. If it depends on proprietary data or workflow depth that a core vendor is unlikely to build soon, that's the case worth paying for.
  • Knowing the legacy exception. If a legacy system will continue to house and service existing policies for years before any platform migration, a general-purpose AI layer built over that system's documents and data, such as a search-and-summarize workflow for policy forms and claim notes, can still earn its keep as a bridge, even without a lasting edge.
The Differentiator

Most coverage of AI hesitancy in insurance treats reluctance as a problem of mindset: Carriers are cautious, regulators are strict, liability is scary. That may be true, but this framing overshadows a more relevant (and more interesting) story.

Carriers that are being deliberate aren't necessarily behind the curve or tech-averse. Many are making a sequencing bet: Let the core platform vendor absorb the integration risk, compliance burden, and audit-trail engineering, and then adopt AI as native functionality instead of a fragile add-on.

That strategy holds up well, with one condition: Waiting has to remain an active decision rather than a default. A carrier that sequences AI adoption around its core platform should still revisit that choice whenever a standalone tool offers an edge its core vendor can't match soon, using the tests outlined above. Handled that way, the real story in 2027 won't be whether insurance is "ready" for AI. It will be which carriers turned strategic patience into a well-timed rollout.

Sources:

- Decerto, AI Claims Processing: The Complete 2026 Guide for US Carriers, April 2026: integration complexity and the estimate that AI vendors lose roughly 40% of projected timelines to it.

- PRNewswire / Convr, Convr Delivers AI Underwriting Across Guidewire, Duck Creek, Sapiens, and Beyond, June 2026: the case against both waiting for core transformation and single-platform lock-in, from a core-agnostic AI vendor.

- Duck Creek, Duck Creek Launches Insurance-Native Agentic AI Platform and Unveils New Applications to Transform Underwriting and Claims, April 28, 2026: launch of the Duck Creek Agentic AI Platform.

- Guidewire, Guidewire Launches ProNavigator, Embedding Expert AI Insights into Insurance Workflows, April 16, 2026: ProNavigator embedded in InsuranceSuite (including ClaimCenter) and InsuranceNow.

- Guidewire, Guidewire Introduces Qusar Release to Help Insurers Build and Control AI Agents, Aug. 3, 2026: Qusar's Agentic Framework and Guidewire-built claims and underwriting agents.

- Zfort, Guidewire ClaimCenter vs Duck Creek Claims, August 2026: comparison of Duck Creek's Agentic AI Platform and Guidewire's Qusar release.

- Hesper AI, Claims management systems compared, May 2026: Guidewire's ProNavigator embedded directly into ClaimCenter.

- Business Wire, Majesco Accelerates P&C Market Leadership with 2026 AI Investment Surge, December 2025: Majesco quadrupling its AI investment and deepening Majesco Copilot and agentic AI capabilities.

- SEC filing, Sapiens Launches Enhanced CoreSuite for P&C, September 2025: Sapiens rolling AI-based functionality into its core platform releases.

- Business Wire, Insurity Named to the AIFinTech100 List of Leading AI Innovators in Financial Services, July 2026: Insurity's additional $100 million commitment, on top of more than $50 million already invested in AI and R&D.

- The Insurer, OpenAI dominates AI stacks as insurance industry moves from pilot to production, May 2026: IA Capital Group survey data on foundation-model presence in carrier AI stacks.

- Shift Technology, Making Agentic AI Work for Insurance webinar page, 2026: the case against generic horizontal AI models for production-grade insurance agents.


James Ballot

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James Ballot

James P. Ballot is an insurance research, thought leadership, and content strategy leader with more than a decade of experience helping industry, regulatory, business, consumer, and higher education audiences understand and navigate complex industry transitions – including the rapid evolution of insurtech and AI-driven automation.


Diane Brassard

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Diane Brassard

Diane Brassard is an operations and AI transformation leader specializing in the insurance industry. With three decades of experience spanning underwriting, claims, and BPO strategy at major carriers, she helps insurers design and execute practical, scalable workflows, whether powered by AI or process redesign, that drive measurable business results.

The Insurance Alignment Gap: Where Insurer Priorities and Customer Protection Needs Converge…and Diverge

Insurers are modernizing for efficiency, while customers seek affordability, trust, and protection. This report reveals how closing the alignment gap can create lasting value.

Insurance

Insurers are prioritizing cost reduction, profitability, modernization, and AI. Customers are looking for something different: affordability, trust, preparedness, and protection that feels relevant to the risks they face every day.

This growing alignment gap matters. Modernization and AI investments deliver their full value only when customers see and feel the benefit. When insurer priorities and customer expectations drift apart, confidence erodes, and so does the opportunity to help customers build financial resilience.

Based on original research with both insurers and insurance customers, this report examines where priorities align, where they diverge, and how insurers can connect business transformation to customer value. It explores three areas that matter most to building confidence and resilience:

Relevance. Customers want protection that reflects their everyday risks. Learn how insurers can deliver coverage that feels meaningful and worth the cost.

Personalization. Tailored products, pricing, and communications help customers feel understood and prepared. Learn how personalization supports trust.

Digital engagement. Digital experiences shape how customers perceive their insurer. Learn how to use them to strengthen confidence and connection.

Whether you lead strategy, product, distribution, customer experience, or technology, this report offers a research-based view of what customers expect and how your transformation priorities can meet them.

Read the Report


Sponsored by Majesco


ITL Partner: Majesco

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ITL Partner: Majesco

Majesco isn’t just riding the AI wave — we’re leading it across the P&C, L&AH, and Pension & Retirement markets. Born in the cloud and built with an AI-native vision, we’ve reimagined the insurance and pension core as an intelligent platform that enables insurers and retirement providers to move faster, see farther, and operate smarter. As leaders in intelligent SaaS, we embed AI and Agentic AI across our portfolio of core, underwriting, loss control, distribution, digital, and pension & retirement administration solutions — empowering customers with real-time insights, optimized operations, and measurable business outcomes.


Everything we build is designed to strip away complexity so our clients can focus on what matters most: delivering exceptional products, experiences, and long-term financial security for policyholders and plan participants. In a world of constant change, our native-cloud SaaS platform gives insurers, MGAs, and pension & retirement providers the agility to adapt to evolving risk, regulation, and market expectations, modernize operating models, and accelerate innovation at scale. With 1,400+ implementations and more than 375 customers worldwide, Majesco is the AI-native solution trusted to power the future of insurance and pension & retirement. Break free from the past and build what’s next at www.majesco.com


Additional Resources

The Second Half of Agentic AI

Read More

The Insurance Alignment Gap: Where Insurer Priorities and Customer Protection Needs Converge…and Diverge

Read More

Operational Value and Impact of GenAI and Agentic AI

Read More

Reimagining Insurance for a More Resilient Future

Read More

State of Core Solutions Transition: Which Tech Priorities Are Being Carried Out?

Read More

Evaluating Leadership Beyond Individual Accomplishments

A broader perspective is needed on how organizations develop, recognize, and evaluate leadership effectiveness.

Insurance

A leadership title establishes authority and responsibility. It does not automatically establish leadership effectiveness. The distinction matters because organizations often evaluate leaders primarily through what they achieve, rather than through what they enable others to achieve.

Business performance, operational improvements, problems resolved, and accomplished organizational objectives are important measures of leadership contribution. These outcomes matter. Leaders have a responsibility to deliver results. But evaluating effective leadership requires looking beyond an individual's accomplishments. It also requires examining how leaders develop the capabilities of others, exercise judgment, establish accountability, and contribute to the organization's ability to achieve results over time.

The question is not simply what a leader accomplishes, but what the organization becomes capable of accomplishing through that individual's leadership.

From Technical Expertise to Leadership Responsibility

Organizations frequently promote individuals into leadership positions because they have demonstrated exceptional technical competence. The reasoning is understandable. These individuals possess valuable knowledge, solve complex problems, and consistently deliver results. However, technical expertise and leadership effectiveness are not interchangeable.

An individual may possess outstanding technical knowledge without having developed the capabilities necessary to coach others, delegate effectively, navigate interpersonal dynamics, or develop a team's collective strengths.

Technical expertise can provide a valuable foundation for leadership. The concern is not necessarily the promotion itself, but the preparation that accompanies it. Does the organization recognize the difference between performing work exceptionally well and enabling others to perform effectively?

Does it prepare newly appointed leaders for that transition?

A promotion changes an individual's responsibilities. It does not automatically develop the capabilities required to fulfill them.

Leadership Development Requires Shared Responsibility

Organizations have a responsibility to prepare individuals for leadership, establish meaningful expectations, and provide opportunities for continued development. Yet leadership growth cannot rest with the organization alone.

Individuals must take ownership of their learning, seek feedback, question assumptions, and recognize that previous success does not necessarily prepare them for every new challenge.

This requires self-awareness and intellectual humility.

One difficulty is that people do not always recognize what they have yet to learn. Meaningful development therefore requires exposure to different perspectives, constructive feedback, and opportunities to discover gaps in knowledge and judgment.

The same principle applies to employees. Leaders can provide guidance, support, and opportunities for growth, but employees also have a responsibility to participate in their own development and fulfill the expectations of their roles.

Effective leadership strengthens individual responsibility rather than replacing it.

Developing Capability While Maintaining Accountability

One of the most significant transitions from technical expert to leader involves learning when to provide an answer and when to help someone develop the ability to find one.

A leader who personally resolves every difficult issue may achieve immediate results. However, consistently doing so can unintentionally limit opportunities for others to develop judgment and confidence. Over time, employees may become dependent on the leader's involvement, even in matters they could learn to handle within their responsibilities.

But the opposite approach can be equally problematic. Delegation without adequate preparation, clearly defined authority, or appropriate oversight does not necessarily constitute empowerment.

Effective leadership requires distinguishing between unnecessary dependence and legitimate organizational governance. Some decisions require specialized expertise, formal approval, or regulatory oversight. These requirements exist for valid reasons and should not be removed simply to encourage independence.

The objective is not to eliminate structure but to develop capable individuals who understand their responsibilities, exercise sound judgment, and operate effectively within established boundaries.

Sometimes this requires coaching or training. Sometimes it requires clearer expectations, improved processes, or a better understanding of the obstacles preventing effective performance. The appropriate response begins with understanding the underlying problem.

The Organizational Environment Influences Leadership Effectiveness

Leadership does not operate independently of the organization. People work within environments shaped by behaviors, expectations, processes, incentives, and relationships. These conditions can support or constrain the development of individual and collective capabilities.

An organization may encourage employees to contribute ideas, yet routinely dismiss questions or provide little meaningful response to suggestions. Another may encourage managers to develop their teams while primarily rewarding those who personally resolve the greatest number of problems. In both situations, organizational practices may undermine stated expectations.

This is why leadership development requires more than formal training programs. Organizations must examine whether their everyday practices reinforce the behaviors they expect from effective leaders.

Culture is not defined solely by what an organization declares. It is revealed through the behaviors it reinforces and the experiences people encounter every day.

Understanding those behaviors, and the conditions that sustain them, creates opportunities for meaningful action.

Rethinking How We Evaluate Effective Leadership

If organizations expect leaders to develop capable people, leadership evaluations should reflect that expectation. Business results remain essential. Leaders must be accountable for performance, execution, sound decisions, and the achievement of organizational objectives.

However, business outcomes alone may not reveal the full contribution of an individual leader. Leadership evaluations should also consider how effectively leaders develop others, delegate responsibilities, strengthen decision-making, maintain appropriate accountability, and prepare individuals for future responsibilities.

They should examine whether teams are becoming more capable of performing their work without unnecessary dependence on a single individual.

These dimensions should not be viewed independently of organizational performance.

Developing people's capabilities can be one of the ways effective leadership contributes to business results.

Employees with stronger knowledge, judgment, and accountability may be better equipped to solve problems, manage risks, improve processes, and contribute to organizational objectives. Over time, these capabilities can strengthen organizational resilience and the ability to sustain performance.

The relationship is not automatic. Business outcomes are influenced by strategy, resources, market conditions, regulatory requirements, and other factors beyond any individual leader's control.

Nor should favorable business results automatically be attributed to effective leadership. Evaluating effectiveness requires considering the leader's behaviors, decisions, contributions, and the conditions under which results were achieved.

A leader may deliver exceptional short-term results while leaving others heavily dependent on their personal involvement.

Another may invest considerable effort in developing employees without adequately fulfilling organizational responsibilities.

Neither example, considered alone, demonstrates the full measure of effective leadership.

The more meaningful evaluation considers both organizational results and the capabilities being developed to support future performance.

The Lasting Contribution of Effective Leadership

Holding a leadership position establishes authority and responsibility. Demonstrating effective leadership requires more.

Effective leaders deliver results, exercise sound judgment, and remain accountable for organizational performance. They also recognize that their contribution extends beyond their individual accomplishments.

Through their decisions, behaviors, and development of others, they can strengthen the organization's collective capabilities and its ability to meet future challenges.

The measure of effective leadership is not only what leaders accomplish themselves, but what their leadership makes possible for others to accomplish. Sustainable organizational success depends on both.

Perhaps that is the broader question organizations should consider when evaluating their leaders:

Are we recognizing leadership primarily through individual accomplishments, or are we also recognizing the lasting capabilities those leaders help develop?

Selected References

Benson, A., Li, D., & Shue, K. (2019). Promotions and the Peter Principle. The Quarterly Journal of Economics, 134(4), 2085–2134. https://doi.org/10.1093/qje/qjz022

Lacerenza, C. N., Reyes, D. L., Marlow, S. L., Joseph, D. L., & Salas, E. (2017). Leadership training design, delivery, and implementation: A meta-analysis. Journal of Applied Psychology, 102(12), 1686–1718. https://doi.org/10.1037/apl0000241

Lee, A., Willis, S., & Tian, A. W. (2018). Empowering leadership: A meta-analytic examination of incremental contribution, mediation, and moderation. Journal of Organizational Behavior, 39(3), 306–325. https://doi.org/10.1002/job.2220

Garavan, T., McCarthy, A., Lai, Y., Murphy, K., Sheehan, M., & Carbery, R. (2021). Training and organizational performance: A meta-analysis of temporal, institutional and organizational context moderators. Human Resource Management Journal, 31(1), 93–119. https://doi.org/10.1111/1748-8583.12284

Finding Value in Today's Volatility

New data sources, better models, scenario planning and faster processing of information can help insurers turn today's "polycrisis" into value for themselves and for customers.

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Insurance

I don't know about you, but I'm a bit wary when I pick up my phone first thing in the morning and check on the state of the world. There's rioting where? A convective storm or wildfire destroyed what? The war in Ukraine or Iran took what turn? Inflation was how high, or job growth how low?

And the volatility is building on itself, creating what some of our authors have dubbed the "polycrisis." Economic problems lead to rioting in France, which destabilizes the Western alliance, which emboldens Putin in Ukraine, which feeds the political crisis in the U.S., which....

The insurance industry generally dislikes volatility. Insurers want a decade or two of data on a risk so they can price it properly. But how do you understand risks that appear so suddenly and can interact in such complex ways?

To get a sense, I turned to Dawn Miller, the chief commercial officer at Lloyd's and CEO of Lloyd's Americas, who explained how new data sources, better models, scenario planning and just generally processing information faster can at least help. 

Let's have a look.

Here is the full interview I did with Dawn. And here is a link to this year's Global Insurance Forum, which our sister organization the International Insurance Society is holding at Lloyd's in London on Nov. 15 and 16 on the theme, "Turning Volatility Into Value." But I'll summarize:

Dawn says, "We're seeing innovations in modeling—additional data transparency being plugged into some of those core models that we've always used to look at some known perils. The perils aren't changing, but our ability to understand them is getting better, sometimes dramatically. There's also an opportunity for geopolitical assessments, economic assessments, and social demographic assessments to all play a role."

She adds that some firms like at least some volatility because it creates more potential for upside and "fits as a diversifier into their portfolios. We see others wanting the longer-tail risk. This may not be as volatile, but they want it for their own investment reasons. Our role [at Lloyd's] is to create the environment for all those different profiles to exist and to all benefit from the diversification of our marketplace. It's not an either-or—the alpha seekers or the beta seekers. It's having both in an environment where they can coexist."

Dawn cautions that today's environment is full of "new layers of complexity": "In the past, our market would focus on certain CAT risks, certain natural perils happening in one place at one time. Now we're seeing multiple risks interact at the same time, from natural catastrophes and supply-chain disruption to inflation, geopolitical uncertainty and demographic risks. And those are just to name a few.... It takes an enormous amount of creativity to predict the layers of complexity around us today."

But she's optimistic about the industry's ability to innovate, including through Lloyd's Lab and the Lloyd's Academy, to help the insurance industry react faster as perils develop and interact. She also sees the industry cooperating, including through the ecosystem that Lloyd's fosters:

"Innovation, whether it is the birth of a new product, or the birth of a new structure, or how we deal with some of the extreme large-scale infrastructure, energy, supply chain, and transportation issues that we see around the world—that is going to take more than one mind to solve."

When I wake up tomorrow morning, I'll still peek at my phone with one eye open to check on the state of the world, but all is not lost.

I hope to see you in London so we can discuss the polycrisis and its many implications in person.

Cheers,

Paul

 

Gen Z Drives Insurance Claims Transformation

Gen Z's demand for instant digital experiences is forcing insurers to modernize claims payments or risk losing policyholders.

Insurance

As digital natives who've grown up tethered to smartphones and social media, the Gen Z population's effect on today's consumer trends is well documented. Young shoppers' demands for instant gratification in consumer transactions have ushered in an era of in-app shopping, next-day shipping, and fast, friction-free digital payment options.

Gen Z's influence is extending to the insurance claims process, as well. More and more, Gen Z's preferences are pushing the industry to uplevel its claims experience – to make it faster, more convenient, more tied to mobile, and more transparent to the policyholder. InvoiceCloud's 2026 Claims Experience survey of 1,000 U.S. policyholders shows Gen Z is nearly twice as likely as the overall population to prefer a digital wallet for claims payments (13% versus 7%).

Recent research shines a light on policyholders' discontent with what they identify as their biggest deal breaker: an unacceptably slow process for paying claims.

The InvoiceCloud survey found that only 9% of policyholders received their claims payment within two days. Meanwhile, a quarter of respondents say it took more than a week to receive their claims payout, while an unfortunate 13% waited "several weeks" to get these urgent funds.

This could cause ripple effects. In a 2022 report, "Transforming claims and underwriting with AI", Accenture estimated that poor claims experiences could put up to $170 billion in global insurance premiums at risk through 2027. The InvoiceCloud survey shows how these risks could materialize. At least 75% of policyholders surveyed say they would consider switching carriers after a single negative claims experience. That's a high percentage in any field, but it's particularly high in personal-lines P&C, where switching providers is often easier than it is in commercial, E&S, or other specialty markets.

Improving the claims process

How do insurance carriers improve the claims process? Our research found that speed and transparency matter most of all to policyholders. When asked directly, 30% named a faster claims payment after approval as the single change they want most, more than any other option, while 22% preferred clearer status communication. Gen Z echoes that second point: 24% named clearer, more consistent communication about payment status as the one change they would make, on par with the 21% who named faster payment.

Another issue: Many carriers have modernized inbound premium payments, but outbound disbursements still rely on paper checks and manual processing. Paper checks create fraud risk, delivery problems, and extra work for commissions and return premiums.

The next generation of policyholders is demanding two changes to this payment structure. They prefer a shift to digital, and they want choices.

Digital disbursement platforms can support a wide variety of options including ACH/direct deposit, debit cards, virtual cards, and digital wallets. Direct deposit to a bank account is policyholders' favorite payout, preferred by 52% of respondents, more than all other options combined. Printed checks still account for 19%, likely reflecting legacy carrier processes rather than genuine preference. The gap between generations is wide: 32% of Baby Boomers prefer a printed check, compared with just 9% of Gen Z.

If slow payouts can lead to defections, digital insurance payments can operate as a retention tool.

Insurance carriers can do this by ensuring this critical touchpoint becomes an easy experience end-to-end, from allowing policyholders to self-serve through digital premium payments, paperless billing, and automatic payments, to instant disbursements delivered however policyholders prefer to receive funds.

Real-time digital disbursements are funds sent electronically and received quickly, without a paper check in the middle. For insurance carriers, this means agent commissions and return premiums move through digital payment processing solutions rather than the mail. More importantly, it means getting funds into policyholders' hands fast, when it matters the most.

Raising expectations

As younger policyholders account for a larger share of the insurance market, experiences they've grown accustomed to in other walks of life will increasingly become expectations for insurance as well.

For many, this translates to being able to complete more transactions on smartphones. Digital payments enable customers to choose a payment method from their phone, receive payment notifications, track payment status, access transaction details, and receive funds directly into an eligible account or wallet. That matters most to the youngest policyholders. When asked for the easiest way to access funds in an emergency, 19% of Gen Z chose a mobile wallet, compared with 5% of Baby Boomers, while only 9% would withdraw cash at a bank, compared with 34% of Baby Boomers.

Gen Z's imprint on insurance claims is becoming more pronounced. Today's policyholders want to have insurance claims processed and paid out faster. But they want more. They want the entire journey – culminating in how and when they get paid – to feel as immediate and seamless as any other digital financial transaction.


Ray Walsh

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Ray Walsh

Ray Walsh leads InvoiceCloud's insurance vertical, helping property and casualty carriers modernize the way they bill, collect, and disburse payments to policyholders. 

He previously served as vice president of enterprise sales at Brightcove and senior vice president of global sales at TransAct Technologies.

Walsh sits on the board of Greater Springfield Habitat for Humanity, where he currently serves as board president. He studied business management at Albertus Magnus College.

Turning Volatility Into Value

Amid today's heightened uncertainty, Dawn Miller, chief commercial officer at Lloyd's, explores how insurers can innovate their way to value both for themselves and for their clients. 

Insurance

Paul Carroll

We’re in an exceptionally volatile period, with major geopolitical and economic risks on top of climate-driven catastrophes, nuclear verdicts, and more. The International Insurance Society’s annual Global Insurance Forum in November, which you’re sponsoring and hosting at Lloyd’s, has as its theme this year: "Turning Volatility Into Value." How do we do that?

Dawn Miller

I'm just coming off some time at CIAB [Council of Insurance Agents and Brokers] in Colorado, and the topic that is on everyone's mind, in addition to market conditions, is how multiple perils are intersecting with global trends to create an increasingly varied and complex risk landscape, with some risks well modeled and others less so. 

In the past, our market would focus on certain CAT risks, certain natural perils happening in one place at one time. Now we're seeing multiple risks interact at the same time, from natural catastrophes and supply-chain disruption to inflation, geopolitical uncertainty and demographic risks. And those are just to name a few. It’s the interaction among these different risks that is adding new layers of complexity.

We have innovations that allow us to model with more transparency, and we can bring in supplementary models to assess risk. That's a good thing. But it takes an enormous amount of creativity to predict the layers of complexity around us today.

Paul Carroll

Yes, some people who’ve written for us refer to a “polycrisis.” You mention modeling. Is that the main way insurers make sense of all these complicated connections, or is it improvements in scenario planning, or something else?

Dawn Miller

I believe it's multiple things. We're seeing innovations in modeling—additional data transparency being plugged into some of those core models that we've always used to look at some known perils. The perils aren't changing, but our ability to understand them is getting better, sometimes dramatically. 

There's also an opportunity for geopolitical assessments, economic assessments, and social demographic assessments to all play a role. The modeling itself is a bit of a Rubik's Cube with multiple facets to it.

Paul Carroll

Wall Street talks a lot about alpha and embraces volatility because it creates opportunities. Historically, insurers have not liked volatility. How do you change that thinking?

Dawn Miller

Given that Lloyd’s is guiding a marketplace, we're creating the conditions for success for the world's best risk takers to attach the risks they want to underwrite with capital. We see a mix in our marketplace. We do see investors coming in looking for some of that volatility. That’s what they like, and it fits as a diversifier into their portfolios. We see others wanting the longer-tail risk. This may not be as volatile, but they want it for their own investment reasons.

Our role is to create the environment for all those different profiles to exist and to all benefit from the diversification of our marketplace. It's not an either-or—the alpha seekers or the beta seekers. It's having both in an environment where they can coexist.

Paul Carroll

Volatility requires agility not just for those transacting in your marketplace but for you, too. How is Lloyd's getting faster at identifying opportunities and scaling the winners as quickly as possible?

Dawn Miller

In March, we launched our new five-year strategy, Advance and protect. It is designed to sharpen Lloyd’s financial edge and maximize our unique capital advantage, including by creating a more efficient and flexible marketplace by making the platform more investable, clear, transparent and agile.

Right now, there's some additional reporting, different ways of working, maybe some duplicated oversight here and there—things that have grown up over time for all the right intentions, but maybe as we evolve are not as pragmatic any more. All of those cause a little bit of extra cost, whether it's in time or resources, because time is money at the end of the day.

So we're making things much clearer, making it much more cost-efficient, making sure we are an engine for driving new talent into the marketplace, attracting the best talent and then recycling them back out as advocates and having the marketplace stronger for their being with us. You're creating an ecosystem that is the center of attracting the world's best risk takers, the best capital together with the best brokers, best clients, the best risk.

What that gives us is the ability to innovate. When we think about Lloyd's and the underpinnings of our strategy, our superpower is our capital diversification benefits. Our other superpowers are around our license structure, the framework we have for innovation, the ability to syndicate risk rapidly, our very strong financial strength ratings.

Innovation, whether it is the birth of a new product, or the birth of a new structure, or how we deal with some of the extreme large-scale infrastructure, energy, supply chain, and transportation issues that we see around the world—that is going to take more than one mind to solve. And we are the marketplace for that sort of solution creation.

Paul Carroll

At ITL, in our little way, our mantra is: Nobody is as smart as everybody.

Dawn Miller

That's exactly right. Our role is to convene a marketplace, creating those conditions for success. It happened 338 years ago when people came together over a cup of coffee and said, Let's share this risk so we can get these ships across the globe. Today, the same principle of combining expertise and capital continues across the underwriting room, Lloyd’s Lab and Lloyd’s Academy. 

Paul Carroll

I’m glad you mentioned the lab and the academy, because, as an old hand on innovation efforts, I wanted to ask how they fit into your broader innovation ecosystem.

Dawn Miller

Absolutely. As you know, Lloyd's Lab launched in 2018 to make sure we had a place to accelerate—not necessarily incubate, and I want to make that distinction—new risk-taking ideas or risk-servicing ideas. Over time, we've grown to have about 160 alumni.

This past cohort, Cohort 17, just went through a selection process. We received 280 applications from 31 countries. Fifteen companies were invited to pitch to the market, and 10 were selected for the 10-week Accelerator program. The market plays a central role in that selection process because the Lab is designed to respond to real market needs. 

The focus of Cohort 17 has been in areas where the Lloyd’s market is actively seeking solutions that improve how the market operates day to day to strengthen its ability to respond to the complexity of today’s risk landscape and this can be seen through the themes: operational efficiency, new products and experimental innovation. 

What does that mean? They come in at all different stages of businesses and ideas. They have mentors from the marketplace. They hone, shift, and massage their product and their service. Then they exit the other end, generally about 80 to 85% of them, with either capacity for a proof of concept or a service contract or service proof of concept into the marketplace. That ranges from new products—cloud downtime, wildfire, data analytics—to a whole variety of services.

They work their way through the market, with an accelerated cover holder process. Some of them, like Parsyl, started in the Lloyd’s Lab. Parsyl began by using data and technology to tackle risks in global health supply chains, then became a Syndicate-in-a-Box and now has in-principle approval to become a full syndicate. That’s the process of taking innovation, testing and proving it in the market, and ultimately giving it the opportunity to scale.

They're a part of our ecosystem once they come out as alumni, and they stay within our ecosystem around the world. We continue to help by giving them opportunities to be exposed to end clients, to regulators, to investors, etc.

Paul Carroll

How do you expect these topics—including innovation, geopolitical risk, and emerging technologies—to be developed at the Global Insurance Forum?

Dawn Miller

I always look forward to the Global Insurance Forum; it's a place where market leaders and market practitioners are coming together to exchange on an equal level. We’re reflecting the trends of the times, whether that’s private credit, scaling innovation or how we move beyond the tactical. This year’s theme, “Turning volatility into value,” really captures that. It’s about moving beyond reacting to uncertainty and using better insight, specialist expertise and flexible capital to anticipate changing needs, build solutions and give customers the confidence to invest and grow. 

The companies that come together are from all around the world. Everybody's lens is going to have a slightly different take on how they deal with geopolitical risk or how they're dealing with supply chain or how they're dealing with credit risk or what they're facing at that exact moment. Bringing all of that together allows us to create a narrative that firmly implants how our industry is driving resilience forward.

Our industry provides the oxygen for the economies around us. And I believe we allow our industry to represent itself or be represented by others in a way other than that. I wish we talked more about the outcome our industry enables: resilience. We need to explain insurance through communities, businesses and economies it enables to recover and thrive and persist. 

The forum also creates a great opportunity to bring some of our young leaders to the table. Their perspectives are varied and rich, and we need that diversity of thought. 

Paul Carroll

As someone who’s covered technology innovations for decades, I confess that it was only about 15 years ago that I realized that none of that happens without insurance. Every major innovation—the personal computer, the internet, the smartphone, social media, search engines, GPS, the driverless car—comes with risks, and nobody can take those risks without some sort of protection. 

Dawn Miller

Right. Isn't it funny? We all sort of take it for granted. 

If we could just reframe the conversation and talk more clearly about how insurance creates resilient communities, helping them thrive, we would give people a much better understanding of the value our industry provides. At Lloyd’s, we don’t just seek to understand risk, we take it on, bringing together expertise, capital and risk appetite to help businesses move forward.

The issue couldn't be more important than it is right now, with the multiple layers of risks that surround us.

Paul Carroll

Thanks, Dawn. It’s always great talking with you. 

Dawn Miller

Thank you for having me, Paul; always a pleasure.

If you’re interested in attending the Global Insurance Forum, you can register here.


Insurance Thought Leadership

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Insurance Thought Leadership

Insurance Thought Leadership (ITL) delivers engaging, informative articles from our global network of thought leaders and decision makers. Their insights are transforming the insurance and risk management marketplace through knowledge sharing, big ideas on a wide variety of topics, and lessons learned through real-life applications of innovative technology.

We also connect our network of authors and readers in ways that help them uncover opportunities and that lead to innovation and strategic advantage.

Car Thefts Are Plunging. Why?

Car thefts in the U.S. tumbled to their lowest levels in decades in 2025, and are down a further 21% this year. The trend is likely to continue, too.

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Insurance

The recent report that auto thefts fell 21% in the U.S. in the first half of the year reminds me of a friend's carjacking some 30 years ago — surely the shortest in history. 

My overeducated friend, with degrees from Brown and the Sorbonne, had just added a certification as an auto mechanic and liked cars that required constant tinkering. While driving near his home in Washington, DC, one afternoon, he stopped at a stop sign, and a pedestrian motioned to him that he had a question. Tim rolled down his window, and the man shoved a gun in his face, ordering him out of the car.

The man got in, engaged the clutch and drove... two feet. He tried again, but the car stalled after two more feet. He tried a third time. A fourth. He hadn't even made it halfway into the intersection before he jumped out, threw the keys at Tim's chest and ran off. 

I'd never thought of having a diseased clutch as an anti-theft device but have watched with interest over the years as actual devices have continually improved. They've now gotten to the point that, combined with other factors, thefts fell 17% in 2024, tumbled 23% last year, to the lowest levels in decades, and are way down again this year. The good news for insurers is likely to continue, too.

Let's have a look. 

Some of my optimism stems simply from the steady modernization of the car fleet. Even though soaring prices for cars have encouraged people to hold on to cars longer than in the past, older, more vulnerable cars are steadily being retired, and that trend will continue. 

In the face of public pressure, companies whose cars were most likely to be stolen have also issued software patches and other updates — as a result, the percentage of car thefts of Kias and Hyundais fell to 14% of the total last year, from 16% in 2024 and 21% in 2023, even as the total of thefts dropped precipitously. 

Meanwhile, the supply chain has sorted itself out post-COVID, so thieves can't rack up the sorts of profits they did from stealing scarce parts in recent years. The U.S. war on Iran may unsettle the supply chain again, including by pushing sales of electric vehicles during a time of high gasoline prices, but the effects have been muted so far, and I suspect they'll remain so.

Law enforcement has stepped up efforts to prevent all sorts of crimes, and car thefts are a visible target at just about all levels of policing. I'm not sure how much more severe enforcement can become, but, especially in a fraught political environment, I don't see that anyone will relax.

Potentially the most important — but fraught — factor that will determine how much car thefts keep falling relates to surveillance technology. Flock has built a massive business by installing cameras on roads nationwide that take pictures of license plates and respond to, among other things, alerts from police departments about stolen vehicles. There are lots of efforts to also figure out how to knit together all the images being gathered by dashcams, which are currently in about one in 10 vehicles in the U.S. and which are being adopted quickly. 

Combining all those feeds could provide real-time intelligence for police departments, making it far easier to catch thieves and creating a massive disincentive for them to steal cars in the first place.  

But....

We've also seen how surveillance can be abused, as I wrote in August. Flock faces a scandal because dozens of police officers used its technology to stalk current and former romantic partners, and the temptation to use surveillance illicitly will only increase as the technology becomes more powerful.

My gut tells me that it will take time, perhaps years, to sort through all the tensions between law enforcement and privacy but that we'll eventually get to the point where some severely circumscribed uses of license plate readers will take another cut out of auto thefts. The privacy issue is one we've mostly navigated with Ring cameras and surveillance cameras on building, so there's a blueprint for progress

The bad guys are always innovating, just as the good guys are, but I think the favorable glide path for car thefts should continue.

Cheers,

Paul

P.S. My other bizarro car theft story, this one involving a nephew and an odd situation for the adjuster:

While my nephew was visiting DC last year, his Hyundai was stolen off the street by four kids — who drove the car right past him as he was talking with the police officer who responded to his report of the crime. They took the car on joy rides for a few days — as evidenced by the thousands of dollars of traffic violations they ran up in DC and Maryland — then used it in a drug deal that went bad. 

The car wound up full of bullet holes, and a friend of the kids was shot. Panicking, the kids put the badly wounded girl in the trunk of the car and dumped her in front of her high school. These young geniuses then abandoned the car and tried to run off but were promptly apprehended by school security. (The girl healed fine.)

The insurance issue was that the adjuster couldn't look at the car because it was in police custody as a crime scene. So my nephew's insurer kept him in a rental car for weeks until it finally satisfied itself that the car was a total loss and wrote him a check for a new one.

My nephew spent weeks unwinding the traffic tickets. He actually had to drive to Baltimore from Philadelphia to appear in court and provide evidence that he couldn't have been at the wheel for the moving violations because he wasn't in Maryland when they occurred. 

 

AI Shapes Customer Demand While Measuring It

AI systems now shape customer choices through recommendations and interactions, making causal identification essential to distinguish genuine needs from system-influenced demand.

Insurance

When companies talk about understanding customer needs, they often assume a simple path:

Underlying Need → Observed Demand

A customer has an underlying need, even if they cannot fully articulate it. Through questions, data, and observed behavior, companies try to work backward from what the customer says or chooses, to understand what that person actually needs.

Demand discovery has therefore traditionally been treated as a process of finding something that already exists.

In a previous article, I argued that reproducing an outcome is not the same as understanding the causal mechanism that produced it. The same distinction applies to customer demand: observing what customers choose is not the same as understanding why that choice emerged.

What deserves more attention is the arrow in the middle.

The path from underlying need to observed demand is never empty. What customers see, how they are questioned, what recommendations they receive, and how they interact with a system can all shape the demand that eventually becomes visible.

AI makes this issue more important.

When systems begin deciding what to present, how to rank options, what question to ask next, what to recommend, or what action to take based on a prediction, the observed demand that companies ultimately see may already contain the influence of the system itself.

How much of the demand we observe reflects what the customer already needed, and how much emerged through the interaction itself?

Figure 1. The full mechanism of demand formation.

1. We Have Treated the "Arrow" as Too Simple

Suppose a customer chooses Product A from three options. The intuitive conclusion is straightforward:

The customer chose A, so A must best reflect their preference.

But before making that inference, there is another question:

Why did this customer see these three options in the first place?

In the age of recommendation systems, different customers are rarely shown identical choices. A system may use previous behavior, income, browsing history, search activity, and other signals to determine which products are most relevant to present. The real process may therefore look more like this:

The system evaluates the customer → determines which options the customer sees → the customer chooses from those options.

In 2021, researchers from Cornell and Stanford described this problem in a paper titled "Choice Set Confounding in Discrete Choice." Many preference models infer what people prefer from the choices they ultimately make. But the choice set itself may already depend on the chooser's characteristics and existing preferences. Recommendation systems are a classic example.

If that mechanism is ignored, two different things can easily become mixed together:

What the customer already preferred, and what the system chose to place in front of them.

The hotel-booking example in the study makes this easy to understand.

Suppose a recommendation system has already filtered hotels based on a user's preferences, and the user consistently chooses the cheapest hotel among those presented. A model might conclude that price is the dominant factor in that person's preference.

But that conclusion may overstate the importance of price. Location, star rating, or other attributes may already have been filtered earlier in the recommendation process. Once researchers accounted for this confounding, price became less dominant, and other factors became more important.

Preference is not the same as underlying need. But choices and expressed preferences are important behavioral signals companies use to infer what customers need. 

That means demand discovery cannot focus only on what the customer ultimately chose. It must also consider the choice environment in which that decision was made.

2. AI Does Not Just Influence What We See. It Can Change What We Choose.

Choice set confounding tells us that a final choice cannot be understood independently of the options that preceded it. But there is an even more direct question:

Can AI recommendations themselves change what people choose?

A 2026 Pension Portfolio Experiment posted on arXiv provides a clear example. Researchers recruited 400 South Korean employees who were actually enrolled in workplace defined-contribution pension plans. In a simulation, participants first allocated a hypothetical pension balance across 11 investment products. They were then randomly assigned one of two AI-generated recommendations: one relatively aggressive and concentrated, the other relatively conservative and diversified.

Participants could then revise their original portfolios. Three findings stand out:

  • 81% changed their portfolios after receiving the AI recommendation.
  • Among those who revised, 95% moved in the direction suggested by the AI.
  • The difference between the two AI recommendations was partially transmitted into the final portfolios: the resulting difference between the two participant groups was about 37% as large as the original difference between the recommendations.

In other words, people did not simply follow the AI wholesale. But different AI recommendations still produced different final decisions.

The effects went beyond superficial portfolio changes. Participants who received the more aggressive recommendation ended up with higher expected returns and volatility, less exposure to low-risk products, and more exposure to high-risk products. The study did not find a significant improvement in risk-adjusted performance, but AI clearly changed the risk structure participants ultimately accepted.

The important point is the causal relationship:

Different AI recommendations produced different final choices.

Participants still retained much of their original judgment. The final decision was therefore neither purely human nor purely AI-generated. It emerged from the interaction between the two.

Now consider what happens next. If a company later observes those revised portfolios and records them as new evidence of "customer preference," that data already contains some of the influence created by the AI itself.

At that point, saying "The customer chose A, therefore the customer prefers A" is no longer a sufficient inference.

3. When a Model Begins to Influence the World It Will Later Observe

This leads to another important idea: Performative Prediction.

In 2020, researchers at UC Berkeley used this term to describe situations in which a prediction, once used to support a decision, changes the very outcome being predicted.

Consider a simple credit example. A bank predicts that a borrower has a high probability of default and therefore charges a higher interest rate. But the higher interest rate increases the borrower's repayment burden, which may itself increase the probability of default. The sequence becomes:

Prediction of high default risk

↓

Higher interest rate

↓

Actual default risk changes

The model appears to describe the world, but once deployed, it also begins to influence the world it is describing. Similar dynamics can occur in traffic prediction, policing, recommendation systems, and financial markets. Applied to demand discovery, the mechanism might look like this:

The model predicts that a customer may need A

↓

A is shown more prominently

↓

A is recommended

↓

The interaction increasingly centers on A

↓

The customer ultimately chooses A

At this point, the first layer of influence has already occurred: AI has affected the customer's choice.

The pension experiment shows that this can happen in practice. But there is a second layer. If the company then uses that choice as training data for the next generation of its model:

The customer chooses A

↓

The system records "customers like this prefer A"

↓

Similar customers are more likely to be shown A in the future

The company is no longer merely observing demand. It is beginning to participate in the formation of the demand it will later observe. This does not mean the model is necessarily wrong. The problem arises when companies forget that their own ranking, recommendation, and interaction mechanisms have already entered the causal process. They may then treat outcomes partly produced by the system as if they were pure evidence of the customer's original preferences.

4. The Path From Underlying Need to Observed Demand Is a Formation Process

The apparently simple relationship:

Underlying Need → Observed Demand

can therefore be expanded into something closer to this:

Underlying Need

↓

Customer Expression

↓

AI Interpretation

↓

Option Configuration / Recommendation

↓

Interaction / Intervention

↓

Customer Reassessment

↓

Observed Demand

Several mechanisms operate inside this process.

  • Choice architecture: determines what the customer sees and how alternatives are arranged.
  • Interaction: determines how the system asks, responds, and continues the conversation.
  • Recommendation: introduces new information and direction into the customer's judgment.
  • Intervention: occurs when the company acts on the model's judgment in ways that affect subsequent responses or decisions.

None of these mechanisms is entirely new. What AI changes is its scale, personalization, speed, and ability to operate continuously. There is also an important distinction to make. The fact that demand is shaped through interaction does not necessarily mean it is being distorted.

In many real situations, customers themselves may not fully understand what they need at the beginning. A well-designed discovery process can use questions, comparisons, and different scenarios to help customers clarify what they actually value.

The interaction therefore has two simultaneous functions. On one hand, it generates new signals and reduces uncertainty about the underlying need. On the other hand, the way questions are asked, options are presented, and recommendations are made can also influence how customers think and respond.

In the past, demand discovery was easier to think of primarily as a form of measurement. With AI, measurement and intervention increasingly occur at the same time.

The challenge is therefore not to eliminate intervention altogether. It is to distinguish between signals that reflect a relatively stable underlying need and signals that were caused by a particular question, choice set, or recommendation.

5. From Collecting Answers to Identifying Causes

If a company relies mainly on correlation, the logic is straightforward:

The customer chose A → therefore the customer needs A.

But once the system itself has participated in presenting, recommending, and explaining A, that inference becomes less reliable.

The more important question becomes: If the conditions were different, would the same need still appear?

  • Would the customer still choose A if A had not been recommended first?
  • If the price changed, would the customer still value the same type of protection?
  • If the customer saw a different set of alternatives, would the expressed preference remain?
  • If family responsibilities changed, would the need for protection change as well?

These are fundamentally counterfactual questions: If a particular condition had been different, would the outcome also have been different?

The contrast can be summarized as a shift from a traditional approach based on observed behavior and correlation to a causal approach that varies conditions and interventions to test demand hypotheses.

By introducing different conditions and interventions, companies can test competing demand hypotheses. Some changes should theoretically have little effect on a genuine underlying need. Other causal factors, when changed, should produce corresponding changes in demand. When customer responses behave consistently with these causal hypotheses, companies have stronger grounds for believing they are identifying the underlying need rather than merely predicting an observed response.

The choice set confounding research points in the same direction. When companies understand the variables used to assign choice sets and the mechanism by which those choice sets were generated, causal methods such as inverse probability weighting and regression controls can help reduce confounding and recover preferences more accurately.

AI therefore does not make genuine customer needs impossible to understand. But it changes what understanding requires. Companies cannot simply accumulate more behavioral data and expect the truth to emerge automatically. They need to understand the conditions under which each signal was generated, and whether the signal still holds when those conditions change.

A more mature AI demand-discovery process therefore cannot stop at:

Ask questions → collect answers → predict demand

It also needs to:

Form a demand hypothesis

↓

Design appropriate questions and scenarios

↓

Observe responses under different conditions

↓

Control for possible confounding

↓

Continuously revise the judgment of the underlying need

For example, a customer may ultimately choose Product A for very different reasons:

  • The customer genuinely needed A from the beginning.
  • The system placed A in front of the customer first.
  • The system repeatedly recommended A.
  • The way the questions were framed directed the customer's attention toward A.
  • Other relevant alternatives were never presented.

The observed choice may look identical in every case, but the mechanism that produced it is not.

Interaction is therefore no longer just a way to collect more data. Every interaction can also become a test of a demand hypothesis. The goal is therefore not simply to improve the predictive accuracy of observed demand. It is to improve the company's causal ability to identify underlying need.

Conclusion: Put the Company Back Into the Causal Chain

Traditionally, the challenge of demand discovery has been to look beyond surface-level statements and choices to understand what customers actually need. AI adds a layer. Once a system begins participating in option design, recommendation, questioning, and decision-making, the observed demand that a company sees may already contain the influence of its own AI.

Companies can therefore no longer ask only: How do we infer underlying need from observed demand?

They must also ask: Through what mechanism was this observed demand produced?

And once measurement and intervention can no longer be cleanly separated, companies need more than stronger predictive models. They need causal methods that can continuously improve their ability to identify underlying needs while interacting with and influencing customers.

A mature AI demand-discovery system should incorporate intervention into its design so that every question, option, and interaction helps distinguish among three things:

what the customer already needed, what the system itself helped cause, and what became clearer through the interaction.

If companies want to understand demand in the AI era, they must begin by putting themselves back into the causal chain.


David Lien

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David Lien

David Lien is a partner at Lingxi (Beijing) Technology. 

He wrote “Decoding New Insurance” (2020), which ranked among JD.com’s top books. Lien has held leadership roles at Sino-US MetLife, Sunshine Insurance and Prudential Taiwan, leading digital transformations and multi-channel marketing. A 2018 e27 Asia New Startup Taiwan Top 100 nominee, he holds a patent for the "Intelligent Insurance Financial Management System." 

Why MGAs Keep Taking Over

Managing general agents now sit at the operating core of specialty insurance, and carriers that still treat them as a side channel are misreading the market.

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For most of the last century, insurance had a simple pecking order. Carriers held the capital, employed the underwriters, and decided which risks to take. Distribution was something that happened around the edges. That order is gone. 

Managing general agents (MGAs) now sit at the operating core of specialty insurance, and carriers that still treat them as a side channel are misreading the market. According to AM Best, U.S. MGA premium reached $108.7 billion in 2025, up 18% from the previous year. The number of MGAs writing over $500 million doubled between 2023 and 2024. Growth is not spreading evenly across thousands of small players. It is concentrating in a handful of strong operators, and capital is chasing them.

A structural shift

Risk has become harder to price. Cyber, climate-exposed property, and marine need granular data and specialist judgment, and generalist underwriting teams inside large carriers cannot deliver either at speed. MGAs can. They have built their businesses around proprietary data, concentrated talent, and purpose-built technology. They launch products in months, where carriers take 18 months or more. In many niches, they also post better loss ratios, and the gap widens as risk gets more complex.

The smartest carriers have stopped trying to close that gap internally. They rent a solution.

The economics are the real story

Speed gets the headlines, but economics explains the boom. Industry ROE recovered to roughly 10% in 2024. Beneath that average, capital-light MGA platforms earn fee-based revenue with no balance-sheet drag, and leading platforms report EBITDA margins of 25-35%.

MGAs look good partly because someone else holds the tail risk. The carrier or reinsurer carries the volatility while the MGA collects the fee. That is a brilliant model when underwriting discipline is strong. The highest-return seat in the value chain is no longer pure risk-bearing. It is risk selection, distribution, and data. But that only holds if the party bearing the risk is choosing partners with real rigor.

Four engines, one flywheel

The boom runs on four reinforcing models:

  • Specialty. Cyber, crop, marine, and excess casualty are increasingly MGA-led, because focused platforms beat generalists on speed and data depth.
  • Fronting. Fronting carriers turned capacity into a utility, so a 20-person MGA can write nationally from day one.
  • Embedded. Insurance sold at the point of sale is projected to reach $700 billion globally by 2030.
  • Parametric. Once a curiosity, now mainstream for climate, travel, and event risk, with the MGA designing the trigger and owning the data.

Each feeds the next. Specialty needs fronting capacity, fronting enables embedded distribution, and embedded data makes parametric products viable. Miss one engine, and you are likely to miss the flywheel.

Geopolitics is now an underwriting input

The timing is not accidental. Trade fragmentation, sanctions complexity, and state-sponsored cyberattacks have turned geopolitical risk from a footnote into a pricing variable. Trade credit, marine war, and political violence covers are repricing in real time.

Cyber is where it all collides. Gallagher's 2026 Cyber Insurance Market Outlook sees global cyber premium growing from about $23 billion in 2023 to as much as $50 billion by 2030. MGAs are writing the leading edge of those new exposures, and carriers who cannot see inside those books will find out about problems the hard way.

Five moves for the next 12 months

If MGAs are the growth engine, the carrier's role changes. The winners will look less like underwriting factories and more like fund-of-funds managers, selecting MGAs the way an institution selects asset managers: explicit return hurdles, data-sharing covenants, and clear exit triggers.

Governance is the binding constraint, and it is where we expect the most carriers to stumble. A weakly supervised MGA channel is an adverse-selection machine. The carriers that succeed will industrialize oversight the way they once industrialized claims. Those that treat delegation as a way to outsource accountability will learn that regulators and reinsurers do not accept that argument.

The window is narrowing. The best MGAs already hold multi-year capacity commitments from a small group of forward-leaning carriers, and late movers will compete for the second tier on worse terms and weaker data rights. Strategic Shift expects the market's structure to be largely set by 2028.

  1. Audit the portfolio. Map every MGA relationship by premium, loss ratio, data flow, and strategic fit. Cut the bottom quartile without sentiment.
  2. Build the onboarding rails. Legal, data, and operational infrastructure should let you onboard a new MGA in 90 days, not nine months.
  3. Put geopolitics on the board agenda. Pricing, exposure, and reinsurance triggers need senior oversight, not a line in the risk register.
  4. Make data a contract term. Granular data, real-time reporting, and audit rights should be standard, not negotiated favors.
  5. Decide where to build versus partner. Internal MGAs make sense for proprietary data, scarce talent, or regulated lines. Everywhere else, partner.

Geopolitical fracture, climate intensification, capital reallocation, and data-driven distribution are converging, and the MGA model sits at the center of all four. The carriers that earn the best returns will not be the ones writing the most premium. Carriers need to audit MGA relationships by premium, loss ratio, data flow, and strategic fit. Build the legal, data, and operational rails to onboard a new MGA. Renegotiate contracts so that granular data sharing, real-time reporting, and audit rights are standard. Put geopolitical pricing and exposure in front of the board. And decide deliberately where to build an internal MGA, which makes sense for proprietary data, scarce talent, or regulated lines, and where to partner.

This article draws on Strategic Shift's whitepaper The MGA Boom.


Radheshyam Moholkar

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Radheshyam Moholkar

Radheshyam Moholkar is the founder of Strategic Shift, an advisory firm helping C-suite leaders shape strategy, lead business & AI transformation, and manage change. He has more than 17 years of global experience across Financial Services and Insurance.