Insurers shift from traditional to real-time risk analysis

Thanks to increased AI-adoption, threats are also rising with phishing attacks up 135% in 2 months.

The integration of artificial intelligence (AI) in cyber security is reshaping risk management, driving both challenges and opportunities for the insurance industry, according to Allianz Commercial’s latest “Gen AI and evolving threats - reshaping the insurance landscape” report.

“Insurers that proactively adapt to AI-enhanced cyber threats, evolve their business models, invest in talent and partnerships, and prioritise ethical AI practices will be best positioned to thrive,” the report said.

Particularly, the report lists six areas AI will impact in the insurance sector: risk assessment and underwriting; policy coverage; claims processing; fraud detection, ethics; and regulatory compliance and governance.

Enterprise AI adoption in cyber security has risen from 49% to 69% year-on-year, with projections estimating cyber security AI spending will reach $46.3b by 2027. 

Some forecasts suggest spending could more than triple in the years that follow. 

AI-driven threats are also increasing, with phishing attacks up 135% over two months, deepfake incidents rising by 2,000%, and AI-powered ransomware achieving 67% higher success rates in data exfiltration.  

The cyber insurance market is expected to grow from $14b in 2023 to $29b by 2027. 

McKinsey estimates that AI could generate $1.1t in annual value for the insurance sector by 2030. 

More than 70% of insurers now use AI-driven risk assessment frameworks, shifting from traditional methods to real-time data analysis from IoT devices, social media, and other sources. 

This approach has improved operational efficiency and risk management, with studies showing a 43% increase in early fraudulent claim detection.