A new analyst report from US-based investment bank and research firm TD Cowen argues that concerns about artificial intelligence (AI) fundamentally disrupting the insurance brokerage sector may be exaggerated, with the firm suggesting that the technology is more likely to enhance brokers’ capabilities than eliminate their role.
The analysis, led by analysts including Andrew Kligerman, Daniel Bergman, Alfred Miller, Jeff Tong and Adittya Parthasarathy, examines the potential for AI-driven disruption across insurance and reinsurance distribution.
According to the analysts, while AI is expected to significantly influence how brokers operate, the core functions performed by intermediaries in complex commercial insurance markets remain difficult to automate.
TD Cowen says the brokerage sector entered the final quarter of 2025 under pressure from investor concerns about weakening pricing in the commercial property and casualty market. Global commercial P&C pricing declined by around 4% during the period, raising questions about the outlook for brokers’ organic growth.
However, the firm notes that brokerage companies still reported mid-single-digit organic revenue growth in the fourth quarter of 2025, which TD Cowen says indicates that underlying demand for broker services remains relatively resilient even as pricing softens.
TD Cowen also highlights a sharp market reaction earlier in 2026, when the commercial P&C brokerage sector experienced an average share price decline of around 9% following announcements of new AI-enabled tools designed for personal insurance purchasing. In the firm’s view, the market response reflected concerns that similar technologies could eventually bypass intermediaries.
The analysts say this reaction may have overstated the near-term implications for commercial insurance brokerage. TD Cowen emphasises that most large brokerage firms derive the majority of their revenue from complex commercial placements rather than personal insurance products, which tend to be more standardised and more suited to automated distribution.
Based on discussions with industry participants and technology specialists, TD Cowen concludes that AI is likely to alter the workflow of brokers but not eliminate the need for human expertise. The firm characterises AI primarily as a “force multiplier”, arguing that the technology is expected to support brokers by automating administrative tasks and improving analytical insight, while leaving key decisions in human hands.
According to TD Cowen, brokers’ role in assessing risk, negotiating terms with insurers and advocating for clients in claims situations depends heavily on experience, judgement and established relationships. The analysts say these elements are difficult to replicate fully through automated systems.
The report also argues that the impact of AI will differ significantly across insurance segments. TD Cowen suggests that personal lines and very small commercial policies may be more exposed to automation because they involve relatively simple and standardised risks. In contrast, the firm says middle-market and large commercial insurance placements involve more complex and bespoke structures, making them less suited to full automation.
TD Cowen identifies the excess and surplus market, along with specialist wholesale brokerage, as particularly resistant to technological displacement. The analysts note that policies in these segments often contain customised coverage structures, evolving exposures and negotiated terms that require ongoing human involvement throughout the policy lifecycle.
The firm also points to structural characteristics of the commercial insurance market that may slow the pace of AI-driven disruption. TD Cowen highlights regulatory requirements such as licensing, audit trails and claims authority as factors that limit the ability of automated platforms to replace licensed intermediaries entirely. The analysts therefore expect hybrid operating models to develop, where AI systems support brokers rather than replace them.
While the firm does not expect widespread disintermediation in the medium term, TD Cowen says AI is already beginning to influence brokerage operations. The analysts point to automation of parts of underwriting submissions, improved efficiency in placement workflows and better matching of risks with insurer appetite as examples of areas where the technology could improve productivity.
TD Cowen also argues that larger brokerage firms may be particularly well positioned to benefit from AI adoption. According to the analysts, effective AI systems depend heavily on proprietary datasets generated from large volumes of transactions and interactions with both clients and insurers. Firms with extensive data, strong relationships and significant capital resources may therefore have advantages in developing and deploying AI tools.
In the analysts’ view, this dynamic could reinforce the competitive position of established brokers rather than enable smaller entrants or start-ups to displace them.
The report also examines broader trends in insurance distribution, noting that direct-to-consumer channels have expanded in certain areas. TD Cowen highlights personal motor insurance as an example, where direct distribution has increased from approximately 16% of sales in 2009 to about 30% by 2024.
Even so, the analysts say other segments have remained far less affected by direct distribution. In life insurance, for instance, TD Cowen notes that direct channels account for only around 5% of individual policy sales in the United States.
Despite recent pressure on brokerage share prices, TD Cowen believes market valuations may reflect overly pessimistic assumptions about both pricing trends and technological disruption. The analysts state that their discounted cash flow modelling, which assumes near-term free cash flow growth of roughly 7.5% over five years followed by 1.5% long-term growth, suggests an average potential upside of around 19% across broker stocks.
While acknowledging that the longer-term impact of AI remains uncertain, TD Cowen concludes that the technology is more likely to increase efficiency and productivity within the brokerage industry rather than eliminate the intermediary role.
According to the firm, the recent sell-off in broker stocks appears to reflect concerns that may prove overstated, although the analysts note that the sector could continue to experience some short-term volatility.
