AI poses new risks, makes assessment more complex: General insurers

At the BFSI Insight Summit 2026, general insurance leaders warned of mounting cyber and AI risks, calling for stronger underwriting, reinsurance protection and clearer policy terms

Cyberattacks that can trigger losses across multiple businesses simultaneously are emerging as a major challenge for general insurers with artificial intelligence (AI) creating new vulnerabilities and making risks harder to assess, industry executives said at the Business Standard BFSI Insight Summit 2026 on Tuesday.

 

Unlike conventional risks, cyber incidents can spread across geographies through shared technology systems and service providers. These can expose insurers to multiple claims from a single event.

 

The potential for such losses makes it difficult to estimate exposure, price policies and determine how much risk insurers can retain.

 

Executives said resilience would depend on insurers’ risk appetite, stress-testing frameworks, underwriting standards and the reinsurance protection available to absorb large losses.

 

AI is adding to the challenge by enabling more sophisticated fraud, including the creation of synthetic documents. Existing policies may also not clearly cover losses arising from AI agents that act unexpectedly or undertake unauthorised actions.

 

Animesh Das, managing director (MD) & chief executive officer (CEO), Acko General Insurance, said traditional underwriting methods were struggling to keep pace with rapidly changing threats. “Cyber risk is evolving almost on a daily basis and that needs heavy technical capabilities. It needs real-time evaluation,” Das said.

 

He called for stronger data intelligence and underwriting safeguards, alongside human oversight as insurers adopt AI tools. “The human-in-the-loop concept is not only a statement, but it is actually a matter of fact,” he said.

 

The challenge extends to consumer awareness and product design. A study cited during the discussion found that 69 per cent of respondents wanted to buy retail cyber insurance, but only 4 per cent had tried or purchased a policy. Participants attributed the gap partly to difficulties in comparing products and uncertainty over what the policies covered.

 

Executives said insurers needed to assess customers’ cybersecurity practices and make policy terms clearer, particularly for enterprise cover involving emerging AI-related risks.

 

The panel also discussed the need for additional reinsurance capacity and India-specific underwriting expertise as cyber and climate risks grow.

 

Hitesh Joshi, chairman and MD of GIC Re, highlighted the difficulty of assessing cyber-risk accumulation, as a single incident can affect organisations across geographical boundaries. He said preparedness varies among insurers and depends on their enterprise risk management systems, risk appetite, reinsurance arrangements and ability to stress-test potential losses.

 

He argued that insurance pools should be used where commercial solutions were unavailable. The discussion also highlighted the cyclical nature of reinsurance pricing: Abundant capital can put pressure on rates, while a major catastrophe can push them higher by depleting capacity. New reinsurers, executives said, would need to bring expertise tailored to Indian risks, not just additional capital.

 

The panel broadly supported the direction of the Insurance Regulatory and Development Authority of India’s (Irdai’s) proposed distribution reforms, while calling for a phased transition to expense-of-management limits.

 

Parthanil Ghosh, MD & CEO, HDFC Ergo General Insurance, said insurers needed time to adjust to the proposed framework.

 

“We are looking for a glide path for the general insurance industry coming from 30 per cent to 25 per cent or from 35 per cent. We want to reach that milestone, take stock of the situation and then go to the next level of 20 per cent,” Ghosh said.

 

He also called for a level-playing field in commission structures, ensuring efficiency gains translate into better outcomes for policyholders.

 

Pallavi Malani, India leader for insurance practice at Boston Consulting Group, said the consultation offered an opportunity to address mis-selling and improve affordability and insurance penetration.

 

“From a medium or long-term perspective, this gives us the one chance to really reimagine the industry,” Malani said.

 

The discussion underscored the need for insurers to strengthen cyber-risk assessment and protection against accumulating losses while improving product transparency, customer trust and affordability of insurance.