U.S. insurance brokers steady after slumping on AI disruption risks
Shares of top U.S. insurance brokers and underwriters steady in premarket trading after Monday's slump on fears about AI disruption in the sector
Online insurance platform Insurify released an AI-powered comparison tool built on ChatGPT, sparking a 3.9% drop in S&P 500 insurance index .SPXIN on Monday; shares of insurance brokers Willis Tower Watson WTW.O and Arthut J Gallagher closed down 12.1% and 9.8%, respectively
Most U.S. insurance stocks were flat on Tuesday, while European insurance stocks tumbled
"We think genuine disruption is likely to take some time - at least 24 months," said J.P. Morgan analysts, adding that the fall in stock prices are perhaps overdone especially given the recent declines
Morningstar says commercial clients are likely to be cautious about adopting new AI tools until they've proven reliable over a long period, making it hard for such solutions to gain meaningful traction anytime soon
Piper Sandler calls it a "potential buying opportunity for the insurance brokers"
AI will make the process easier and cheaper for consumers, but won't significantly shift market share given the market's maturity, regulation and existing customer preferences, adds Piper
.SPXIN down ~5% YTD
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