‘We are running about 10 pilots at the moment’ – Beazley CEO Adrian Cox on the AI revolution

Beazley CEO Adrian Cox has his eyes on the food industry. That might sound odd coming from the head of one of Lloyd’s largest insurers, who has just led the company to record profits, but he has good reason.

Cox was impressed by how a food firm deployed a powerful artificial intelligence tool.

The food conglomerate used artificial intelligence (AI) to analyse all the bills paid for the materials received over the last 18 months and compared them to what they’d received from their warehouse.

The result? The food firm clawed back $1bn in overpayments.

Cox remarks: “Now, obviously it’s quite a big food company, but that is a remarkable use case.

“And so the ability to be able to do that kind of granularity of assurance around what you’re doing is quite exciting. So, I do think the use of AI is going to increase rapidly, but perhaps not in the ways that we’d first thought good.”

Beazley is using AI in a wide range of areas. Its greatest strengths are evident on the operational rather than underwriting side of business.

Speaking on the Voice of Insurance podcast, Cox explains: “We’re running about 10 pilots at the moment, ranging from triaging risks to speeding up some of the processes in terms of digesting documents, helping some of the claims processes, and so on and so forth, and we are gradually figuring out how to scale those.

 “I don’t think the development in using AI in terms of tackling underwriting decisions has progressed as far as it has on the more operational side.”

Cox has two additional insights regarding AI. The law of diminishing returns applies – the more questions asked, answers deteriorate. Also, be nice to get better responses.

“Plus, if it does come a time when the machines take over, you want them to remember that you were nice,” he quips.

Record breaker

AI is just one component used successfully by Beazley to achieve record profits.

Last year, Beazley reported a record profit before tax of $1.423 billion for 2024, a 13% increase compared to the previous year.

Additionally, there was a real sweetener for shareholders – the company returned $700 million to shareholders through dividends and a share buyback programme. 

Cox says prices are ‘quite good’ in the speciality market. Demand is rising as well. It is a competitive market, but full of opportunity.

Geoghegan also highlights Beazley’s culture of ‘rigour and discipline’ and ‘willingness to allow controlled experimentation’.

Cox adds: “If you look at the sort of three platforms that we have, we’re still seeing business flow into the NS (non-standard) market, onshore in the US. That’s nice and healthy.

“I think the rate of demand flow into London has slowed a bit, but there’s still plenty of demand growth in Europe. So that optionality is also quite useful to have.

“And one of the big macro themes, I think, of the last seven years has been that the amount of risk in the world is going up, and that drives the need for insurance. And that’s good.”

Smart follow-on

One of the most impressive features of Beazley’s performance has been its successful adoption of smart follow-on.

Cox says: “The results of our smart tracker in terms of return on capacity since it started in 2018 have been better than 623 (syndicates), except for last year.”

The success of smart follow-on has triggered a market wide debate: if insurers can become more efficient with the technology, who should gain?

Cox opines: “It should benefit the client. It should benefit us, and it should benefit the broker.

“So, we should get more efficient, and the client should benefit from that increase in efficiency.

“Because the conversation that we were having a few years ago was, why are there 35 points of frictional cost in the administration of insurance? And part of the battle is to get that down. And I think the savings should be shared.”

A decarbonised future

Looking to the future, Cox believes decarbonisation will be a huge pull for insurers.

“We do see the flow of investment money into decarbonisation increasing rapidly, irrespective of politics around the world,” he says.

“And a lot of that will need insurance, and a lot of that insurance is yet to be written, and that’s super interesting.”

Cox’s team are currently working on how to insure a couple of nuclear plants, which is ‘fabulous’ and ‘really interesting’.

Questioned by Geoghegan on how you would even start on such a project, Cox gave a fascinating insight: “You start by looking at how comparable things have been issued in the past. And so how did governments think about liabilities when they first drilled in the sea, for oil, for example, or first in satellites into space, and you apply some of those learnings with this.”