2026-11-09 · Source: Insurance Business Australia
Summary in 3 Points • APRA warns that AI-driven pricing could make some risks harder or more expensive to insure, affecting accessibility. • Suzanne Smith highlighted that AI could improve underwriting but also risks narrowing insurance pools. • The use of AI by brokers may enhance product comparison but could also lead to increased costs for insurers. --- Suzanne Smith from APRA cautioned that sharper risk pricing through AI could make certain risks more challenging to insure, potentially narrowing insurance pools. While AI has the potential to enhance underwriting and pricing accuracy, it raises concerns about the accessibility and affordability of insurance for clients with high-hazard properties or difficult occupations. Smith noted that brokers and customers are increasingly using AI to compare products and contest claims decisions, which could improve competition and customer understanding. However, this trend may also lead to higher costs for insurers due to unreliable AI-generated advice and increased claims material. As AI becomes more prevalent, intermediaries may need to focus more on risks that algorithms price out, highlighting the importance of skilled brokers in navigating these changes. AI-driven pricing could narrow insurance pools, impacting brokers' roles in managing high-hazard risks and client expectations.
AI-driven pricing could narrow insurance pools, impacting brokers' roles in managing high-hazard risks and client expectations.