Goldman Sachs, an investment bank and financial services company, has published an analysis exploring how artificial intelligence could influence the property and casualty (P&C) insurance sector.
In the report, Goldman Sachs says it has developed what it describes as “an initial framework to assess the impact of AI across P&C insurance stocks.”
According to the firm, the framework combines its own evaluation of potential revenue and expense risks and opportunities with a review of what companies themselves have publicly said about their AI strategy and progress.
Goldman Sachs explains that its assessment considers both operational efficiency and competitive positioning, while also analysing how insurers are discussing the technology. The bank writes that its framework combines their “analysis on revenue/expense risks/opportunities with analysis on what each company has discussed publicly in regard to its AI strategy and progress.”
In its review of different parts of the market, Goldman Sachs suggests that commercial insurers may be among the strongest positioned within the P&C sector. The firm states that it sees “commercial insurers as best positioned in the P&C insurance space given strong revenue protection, some opportunities for expense savings, and generally strong technology awareness.” Goldman Sachs argues that these companies benefit from established market structures that may be difficult for new entrants to replicate.
The bank notes that commercial insurance underwriting is typically a capital-intensive activity that operates within strict regulatory frameworks. It also emphasises that established insurers hold significant proprietary data and longstanding market relationships. According to Goldman Sachs, incumbents possess “significant relationships and proprietary data (claims, pricing etc.),” which may help maintain their position as technology evolves.
Distribution dynamics are also highlighted in the report. Goldman Sachs says it expects the broker channel to remain dominant in commercial insurance, stating that “distribution is likely to continue to be dominated by brokerage for which insurers have strong relationships.” The firm adds that earlier attempts by technology-focused competitors to disrupt the market by offering lower prices have not always been successful. As Goldman Sachs puts it, “past tech-driven efforts to offer lower prices often end in new competitors getting adversely selected against.”
The firm also argues that cost savings created by AI may persist longer in commercial insurance than in consumer-focused lines. Goldman Sachs says it believes that “AI related expense savings are likely to be retained for longer versus consumer insurance.”
Turning to insurance brokers, Goldman Sachs states that the large brokerage groups it covers are not heavily exposed to markets where revenue disruption from AI is expected to be most pronounced. However, it acknowledges that some risk exists in certain areas of distribution. The report notes that “insurance distribution may face some revenue risk in lower complexity brokerage or less complex consulting.”
At the same time, Goldman Sachs identifies brokers as potentially significant beneficiaries of cost efficiencies from AI. The firm points out that these companies often carry large employee compensation expenses in roles that are not directly tied to revenue generation. As a result, Goldman Sachs believes brokers have “the most meaningful opportunity to generate expense efficiencies owing to the largest non-revenue producing employee compensation cost base within P&C insurance.”
The report also states that the brokerage businesses analysed appear to face relatively limited revenue risk in the near to medium term. Goldman Sachs attributes this to their limited exposure to more commoditised insurance products, noting that the brokers in its coverage have “minimal exposure to relatively more commoditised products like mass market personal auto/home insurance or micro small business insurance.”
When discussing the reinsurance sector, Goldman Sachs suggests that the outlook for AI-driven change may be more moderate. The bank writes that reinsurers could play a role in the development of new forms of coverage related to digital infrastructure risks, while continuing to rely on established global market positions.
However, Goldman Sachs also argues that reinsurers may see fewer operational savings from AI compared with other segments. According to the firm, this is partly because their expense structures differ from those of primary insurers and brokers, with compensation representing a smaller share of operating costs.
The report notes that several reinsurers have already spoken publicly about potential AI use cases. Goldman Sachs says some have discussed applications aimed at “increasing submission intake and underwriting efficiency.”
Nevertheless, the firm also reports that reinsurers themselves have indicated that the primary insurance market may ultimately benefit more from these efficiency improvements, with some saying they “expect primary carriers to be the main beneficiaries from AI efficiency gains.”
Goldman Sachs concludes that AI could influence each part of the insurance value chain differently, depending on factors such as regulatory exposure, operational structure and distribution models. The firm’s framework, it says, is intended to provide a structured way of evaluating those differences as insurers continue to incorporate AI into their strategies and operations.
