Å˽ðÁ«´«Ã½Ó³»­

Artificial Intelligence Not Main Cause of Recent Å˽ðÁ«´«Ã½Ó³»­ Layoffs: AM Best

By | November 15, 2023

AM Best does not believe artificial intelligence is the main cause of recent insurance industry layoffs.

In commentary released today, the credit rating agency wrote that “it is too soon to cite AI as the leading cause of the job losses, at least at this nascent stage.” Instead, AM Best said the layoffs likely fall into “the cyclical, rather than the structural, category.”

The rating agency explained that structural unemployment refers to jobs that are made redundant because of systemic changes and the adoption of technology, or a misalignment between business needs and employee skills. Cyclical unemployment refers to employment fluctuations driven by the business cycle, “which seems to be the case in the insurance industry,” AM Best said.

This insight comes after Liberty Mutual, American Family and GEICO announced staff reductions in recent months. AM Best wrote that personal lines are most affected by the latest layoffs, as loss ratios and underwriting margins are pressured by loss cost inflation, reinsurance capacity and pricing and rising climate risk.

Related: Liberty Mutual Announces 850 Additional Layoffs

The commentary said the recent insurer layoffs alone do not signal ratings pressure.

AM Best did share that artificial intelligence-related advances will gradually reshape the outlook for insurance industry employment. Many insurance companies are experimenting with and are motivated by generative AI’s customer service potential, AM Best reported, later noting that the speed at which AI develops over the coming years will determine the level of industry disruption.

“Although the overall impact of generative AI on employment remains uncertain, it will likely change the way society works, as current employees learn to leverage the power of this developing technology,” AM Best said.

Related: GEICO Lays Off 6% of Workforce and Will Require More In-Office Time

According to the Bureau of Labor Statistics, hiring by insurance carriers and related companies slowed to an estimated 1,100 positions in October. This was down from September, when the BLS reported 3,900 people were hired, and July, when 8,300 new workers were brought on board.

Å˽ðÁ«´«Ã½Ó³»­ technology companies have also been downsizing. Hippo, Branch Å˽ðÁ«´«Ã½Ó³»­, Corvus Å˽ðÁ«´«Ã½Ó³»­ and Pie Å˽ðÁ«´«Ã½Ó³»­ announced layoffs earlier this year. Last year, Thimble, NEXT, Lemonade and Root were among the insurtechs trimming their workforces.

Topics InsurTech Data Driven Artificial Intelligence AM Best

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • November 22, 2023 at 9:08 am
    BOB says:
    I have little time for BIG FISH IN THE LIL POND MEN LIKE YOU! For once, FOR ONCE, like our grandparents used to do, THINK OF OTHERS! You fail to mention anything about the m... read more
  • November 17, 2023 at 12:56 pm
    Jon says:
    Once again, Polar is a GD idiot. The idea of a minimum wage was created to allow every american a living wage and a family on one income. Republicans destroyed this. You want ... read more
  • November 16, 2023 at 7:56 am
    PolarBeaRepeal says:
    Root cause: energy price inflation. Solution: different leadership, but not in insurance companies.

Add a CommentSee All Comments (7)Add a Comment

Your email address will not be published. Required fields are marked *

*

More News
More News Features