AI adoption is reshaping the risk landscape for the insurance sector, according to the Swiss Re Institute, the research arm of ICMIF Supporting Member Swiss Re.

In its latest Sigma report, the Institute explains how investment in data centres, power infrastructure, and always-on digital operations is creating new exposures for insurers across property, engineering, liability, and specialty lines.

The Institute expects AI to reduce risk exposures in some sectors over time while creating new ones in others. This could lead to a reallocation of insurance demand rather than uniform growth, increasing the importance of portfolio steering and risk selection, it adds.

AI is also introducing emerging risk dimensions such as new cyber and fraud risks, liability exposures linked to algorithmic failures or bias, intellectual property disputes, and non-physical business interruption.

Meanwhile, insurers are using AI to improve efficiency when dealing in underwriting, claims, and operations. However, the Institute warns that such advances should be accompanied by strong governance, transparency, and human judgement.

It also encourages insurers to focus on resilience, particularly in understanding price and managing volatility, accumulation, and reallocation risks during their AI transition.

The full report is available on Swiss Re Institute’s website.