2026-09-28 · Source: Reinsurance News
Summary in 3 Points • Jefferies analysts suggest reinsurers are seen as a safe haven from AI implementation risks due to data availability issues. • The reinsurance market's sophistication and limited touchpoints make it less susceptible to AI disruption compared to primary insurance. • Larger insurers with significant AI budgets may consolidate market share, potentially reducing demand for reinsurance among smaller players. --- Analysts at Jefferies have identified reinsurers as a refuge from the risks associated with AI implementation. They argue that the data necessary for underwriting reinsurance is not easily accessible, making it difficult for AI to replace reinsurers. Additionally, the reinsurance market's complexity and fewer distribution channels mean that sophisticated buyers are unlikely to rely on AI for nuanced purchases. However, there are concerns that AI could lead to a reduction in the number of market participants, indirectly affecting reinsurers' demand. Jefferies warns that as larger insurers invest heavily in AI, they may capture a greater market share, leaving smaller insurers at a disadvantage. This shift could diminish the relevance of reinsurance, as larger, more diversified insurers typically require less external cover. Consequently, if market consolidation occurs, the reinsurance industry may face challenges in maintaining its role, particularly as smaller insurers, who rely more on reinsurance for growth, struggle to compete against their larger counterparts. For the London Insurance Market, the quota share reinsurance line of business may see reduced demand as larger insurers dominate, impacting institutions like Lloyd's of London.
For the London Insurance Market, the quota share reinsurance line of business may see reduced demand as larger insurers dominate, impacting institutions like Lloyd's of London.