2026 Executive Outlook | Bernard McNulty, Canada at Allianz Commercial

Rapid advancement, adoption, and use of Artificial Intelligence (AI) is leading to new risks that Property and Casualty insurers must contend with in 2026.

Our industry is striving to leverage AI to improve our data, accurately measure our exposures, our pricing and almost every other aspect of our businesses. We’re also looking for efficiencies, increased speed and expense savings. And we’re using AI to strengthen our resilience, including cyber security.

The risks associated with AI use need to be identified and managed. Some are straightforward, such as hardware or software failures, data inaccuracies, or privacy and regulatory compliance. But it’s more difficult to identify risks associated with reputation, culture and role displacement. One example may be AI-based hiring tools, which can create issues if they lead to discrimination against legally protected groups of people based on age or race.

An AI-based process change can significantly alter infrastructure, controls and governance that are so important in our industry. We must ensure important checks and balances evolve in scope and scale to identify and manage these AI-driven risks effectively. The human control points we put in place will be key to our defense.

Insurance products we are designing and pricing for AI exposure are in the early stages. Policy language is evolving quickly. Generative AI endorsements, AI warranty insurance and other products are being added to policies. The early claims are just coming in, and coverage concerns and disputes are only just starting. Any ambiguities leading to coverage litigation will follow. These secondary risks need to be fully assessed.

As we adopt AI to improve our own businesses, we need to protect our partners and supply chains from risks. As we aggregate data, privacy may be the biggest risk, but copyright and trademark infringement and many other concerns are also important aspects. We need to embrace and leverage AI, but do it in a thoughtful, holistic way to ensure our employees, clients and business partners are all carefully considered.