AI Insights – November 7, 2025
Welcome to this week’s roundup of the most important AI developments in the insurance industry. Here’s what caught our attention this week.
Zurich Insurance Launches Groundbreaking AI Lab
In one of the boldest moves yet by a major global insurer, Zurich Insurance Group announced on October 29th the launch of the Zurich AI Lab, a dedicated research facility aimed at fundamentally transforming the insurance business model through artificial intelligence. Led by Group CEO Mario Greco, the initiative represents a significant commitment to moving AI from efficiency tool to business model disruptor.
The lab brings together world-class academic research from the University of St. Gallen’s Institute of Management & Strategy and ETH Zurich’s Agentic Systems Lab, with operations spanning St. Gallen, Zurich, and Singapore. A multidisciplinary team of PhD and master’s students will lead research efforts, guided by senior Zurich executives and university professors.
What makes this initiative particularly noteworthy is its ambitious scope. Rather than focusing solely on incremental process improvements, the lab aims to develop scalable AI solutions that address fundamental insurance challenges and redefine customer expectations. The research will also produce academic publications on AI’s transformative impact on insurance strategy and business models.
Mario Greco called the lab Zurich’s “moonshot factory,” emphasizing the goal to “revolutionize our business model and pioneer the next generation of insurance solutions.” This emphasis on agentic AI, which enables autonomous multi-step workflows, signals where leading insurers believe the technology is heading.
Why This Matters: The launch of a dedicated AI research lab by a major global insurer validates that AI is no longer viewed as just another IT project. When a company with Zurich’s scale commits this level of resources to fundamental AI research, it sends a clear message to the industry about the strategic importance of this technology. Smaller carriers and agencies should take note: the competitive gap between AI leaders and laggards is widening rapidly.
Read the full Zurich announcement
Forrester: Cyber Insurance to Surge 15% on AI-Related Threats
A new report from Forrester Research, published November 5th, predicts that cyber insurance premiums will grow 15% in 2026, driven primarily by risks associated with widespread AI adoption. According to Rohit Makhijani, principal analyst at Forrester, implementing AI significantly increases organizational threat surface area, requiring more comprehensive insurance coverage.
The report highlights a troubling reality: AI is becoming both a weapon for malicious actors and a target itself. The technology enables more sophisticated attacks while simultaneously creating new vulnerabilities that didn’t exist in traditional IT environments. AI’s potential to create and accelerate new threats from cybercriminals is outpacing defensive capabilities at many organizations, leading to increased successful attacks.
After explosive growth between 2017 and 2022, the cyber insurance market had been cooling. Makhijani attributed this slowdown to market maturation and excess capacity chasing risk. However, the widespread adoption of AI is expected to reverse this trend by dramatically expanding the risk landscape.
The report’s authors recommend that cyber insurers become proactive partners in cybersecurity by providing cyber defense services, risk mitigation tools, and innovative ways to underwrite new AI-related risks. The bottom line: as AI adoption accelerates, so too will the cyber threats that drive demand for insurance.
Why This Matters: This report underscores a critical dual reality for insurers. On one hand, AI creates significant new insurance opportunities as cyber risk expands. On the other hand, insurers themselves face these same threats as they adopt AI systems. Carriers need to simultaneously develop expertise in underwriting AI-related cyber risks while also hardening their own AI implementations against attack.
View the Forrester research coverage
Forrester: Top Insurers Will Pull Away Through AI Automation
The same Forrester report delivered another important prediction: expense ratios at the top 50 insurers will decline by two percentage points in 2026 due to AI and automation. While this may seem modest, in an industry where margins are measured in basis points, a 200-basis-point improvement represents a massive competitive advantage.
According to Forrester’s research, carriers are doubling down on automation to protect margins as global insurance growth slows. A third of AI decision-makers in the insurance industry report that automation efficiency improvements are among the most positive impacts from AI adoption over the past year.
However, the report also acknowledges significant challenges. Realizing returns on AI investment remains difficult due to gaps in strategy, data readiness, AI governance, and talent. Makhijani noted that the insurance industry is struggling to determine which use cases to implement, explaining that transformative technology requires time to integrate into how people work.
The report’s most striking conclusion: top insurers with the scale, budget, and strategic clarity to industrialize AI will find success and pull ahead. Companies like Chubb, which spends more than $1 billion annually on technology, and The Hartford, which has committed to leading the industry in AI, are positioned to gain significant advantages. Smaller carriers with more limited resources risk falling behind, potentially losing ground during the lag time required to catch up.
Why This Matters: The message is stark but clear: AI is creating a bifurcated insurance market. Large carriers with resources to invest heavily in AI will achieve operational efficiencies that smaller competitors cannot match. Independent agencies and smaller carriers need to act now to identify AI partnerships, consortiums, or vendor solutions that can help level the playing field. Waiting for the technology to mature further may mean waiting too long.
Insurance Turns to AI as Critical Enabler of Agility
In an analysis published November 3rd in Insurance Journal, industry experts explored how AI is enabling insurers to respond faster to market disruptions, from climate challenges to economic volatility. The article argues that AI’s ability to rapidly scale capacity, instantly apply improvements across organizations, and adapt decision-making in real-time represents a fundamental shift for an industry not historically known for agility.
Advanced analytics are helping agents identify the right carrier fit for specific needs and risk profiles, while working bidirectionally to help carriers connect with agents who align with their business strategies. This creates more strategic, data-driven partnerships rather than relying solely on traditional relationship-building.
For agents, AI can make decades of industry data available for easy analysis, helping even new professionals deliver seasoned-level insights to customers. Consulting firm-quality research and analysis becomes available to decision-makers at every level, allowing complex questions that traditionally took hours or days to resolve to be answered in minutes.
Looking ahead, the article envisions AI acting like a virtual sub-agent, capable of finalizing or even binding straightforward policies, with human agents providing oversight. The common thread across all these applications is speed of response to change, an ability that’s becoming increasingly essential as the pace of change accelerates across insurance.
Why This Matters: The concept of AI-driven agility challenges the insurance industry’s traditional mindset. Where capacity constraints have historically limited growth, AI removes bottlenecks entirely. Agents who embrace these tools can punch above their weight, competing effectively with larger competitors. The question is no longer whether to adopt AI, but how quickly you can do so before competitors gain an insurmountable advantage.
Read the full Insurance Journal article
The Widening Gap: AI as Top Risk for Insurance Sector
According to a new Global Forecast Report from law firm Kennedys, which surveyed 170 partners and analyzed extensive client interactions, AI has surged to become the top-ranked risk for the insurance sector, displacing all other major concerns. The report ranks AI as the number one risk globally, followed by cyber attacks and extreme weather events.
Perhaps most striking is what fell in the rankings: sustainability issues, once a significant focus, dropped to dead last at 10th out of 10. Areas such as net-zero targets, greenwashing claims, and consumer protections now appear less urgent, potentially influenced by shifting political priorities and a more established regulatory framework.
The report emphasizes that the cost to the insurance sector of widespread AI adoption remains a huge unknown. A critical concern is “silent AI” coverage, analogous to the “silent cyber” issues the industry learned from. If traditional policies don’t explicitly consider AI-related risks, they could provide unintentional coverage for AI-related losses that were never priced into the policy.
Tom Pelham, global head of cyber and data at Kennedys, warned: “Being utterly nimble and embracing the change AI will bring is the only survival option. Sticking to traditional ways of working and interacting with the world will make insurers and corporates obsolete.”
Why This Matters: When legal experts who work closely with insurers identify AI as the top industry risk, it’s time to pay attention. The “silent AI” coverage issue could create billions in unexpected losses if not addressed proactively. Every insurer should be conducting a thorough review of policy language to identify where AI-related exposures may exist, and working to exclude or appropriately price these risks.
Action Items for Insurance Executives
Based on this week’s developments, here are concrete steps your organization should consider:
Develop Your AI Research Agenda: Zurich’s lab demonstrates the value of dedicated AI innovation efforts. While you may not have resources for a full research lab, consider partnerships with universities, participation in industry consortiums, or dedicated internal innovation teams focused on AI applications.
Assess Your Cyber Exposure to AI: With cyber insurance premiums rising 15% due to AI-related threats, conduct a thorough audit of your AI implementations. Where are your vulnerabilities? Do you have adequate cyber insurance coverage for your own AI deployments? Are you properly underwriting AI-related cyber risks for clients?
Review “Silent AI” Coverage: Following Kennedys’ warning about unintended AI coverage, convene your underwriting, legal, and actuarial teams to identify where policy language may provide unintended coverage for AI-related losses. Begin developing appropriate exclusions or endorsements.
Identify Quick AI Wins: With top insurers pulling away through automation, you need to start realizing AI benefits now. Identify 2-3 high-volume, low-complexity processes where AI could deliver immediate ROI within 90 days.
Build Agility Through AI: Use this period of rapid change as an opportunity to rethink workflows. Where can AI enable you to respond faster to market changes? What traditionally took weeks that could be accomplished in hours or minutes?
Partner Strategically: If you lack the scale to build comprehensive AI capabilities internally, actively seek partnerships, vendor solutions, or consortium arrangements that can provide access to enterprise-grade AI tools.
Looking Ahead
The themes this week are unmistakable: AI is creating a two-tier insurance industry where leaders are pulling away from laggards, new risks are emerging faster than traditional insurance processes can address them, and organizational agility is becoming a competitive necessity.
The window for catching up is narrowing. Insurers that view AI as a distant future concern rather than an immediate strategic priority risk finding themselves unable to compete on cost, speed, or service quality.
Next week, we’ll be watching for continued developments in agentic AI implementations, regulatory responses to emerging AI risks, and practical case studies from insurers who are successfully deploying AI at scale.
As always, the key is balancing innovation with responsibility. Move fast enough to capture competitive advantages while maintaining the risk management discipline that defines our industry.
Sources
Zurich Insurance Group: https://www.zurich.com/media/news-releases/2025/2025-1029-01
Claims Journal (Forrester Research): https://www.claimsjournal.com/news/national/2025/11/05/333914.htm
Insurance Journal: https://www.insurancejournal.com/magazines/mag-features/2025/11/03/845609.htm
Insurance Thought Leadership: https://www.insurancethoughtleadership.com/ai-machine-learning/how-ai-will-transform-insurance-2025
McKinsey & Company: https://www.mckinsey.com/industries/financial-services/our-insights/the-future-of-ai-in-the-insurance-industry
Fenwick & West: https://www.fenwick.com/insights/publications/ai-in-the-insurance-industry-balancing-innovation-and-governance-in-2025
Have insights to share or questions about this week’s AI developments? Connect with me on LinkedIn or visit insuranceindustry.ai for more coverage of AI in insurance.
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