Fears that artificial intelligence (AI) will fundamentally disrupt the insurance brokerage industry may be exaggerated, according to a new analyst note from US investment bank and research firm TD Cowen, which says the technology is more likely to augment brokers’ capabilities rather than eliminate their roles.
This analysis, led by analysts including Andrew Kligerman, Daniel Bergman, Alfred Miller, Jeff Tong and Adittya Parthasarathy, explores the potential for AI-driven disruption in insurance and reinsurance distribution.
While artificial intelligence is expected to significantly impact how brokers operate, core functions performed by intermediaries in the complex commercial insurance market remain difficult to automate, analysts say.
TD Cowen said that entering the final quarter of 2025, the brokerage industry is facing pressure from investors concerned about weak pricing in the commercial real estate and casualty insurance markets. Global commercial property and casualty insurance pricing fell about 4% during the period, raising questions about brokers’ organic growth prospects.
However, the firm noted that brokerage firms still delivered mid-single-digit organic revenue growth in the fourth quarter of 2025, which TD Cowen said indicated underlying demand for brokerage services remained relatively resilient even as pricing softened.
TD Cowen also highlighted the dramatic market reaction in early 2026, when the commercial property and casualty brokerage industry saw its average share price fall by around 9% following the announcement of a new AI tool designed for personal insurance buying. The company believes the market reaction reflects concerns that similar technologies may eventually bypass intermediaries.
Analysts said the reaction may have exaggerated the near-term impact on the commercial insurance brokerage business. TD Cowen highlights that most large brokerages derive the bulk of their revenue from complex commercial placements, rather than personal insurance products, which tend to be more standardized and better suited to automated distribution.
Based on discussions with industry players and technology experts, TD Cowen has concluded that AI may transform broker workflows but will not eliminate the need for human expertise. Describing AI primarily as a “force multiplier,” the company believes the technology has the potential to support brokers by automating administrative tasks and improving analytical insights, while offloading key decisions to humans.
TD Cowen says a broker’s role in assessing risk, negotiating terms with insurers and defending clients in the event of a claim relies heavily on experience, judgment and established relationships. Analysts say these elements are difficult to fully replicate with automated systems.
The report also believes that the impact of artificial intelligence on different insurance fields will be significantly different. TD Cowen believes personal lines and very small commercial policies may be more vulnerable to automation because they involve relatively simple and standardized risks. In contrast, mid-market and large commercial insurance placements involve more complex and customized structures, making them less suitable for full automation, the company said.
TD Cowen believes that surplus and surplus markets, as well as specialist wholesale brokerage, are particularly resistant to technological substitution. Analysts note that policies in these segments often include customized underwriting structures, changing risk exposures and negotiated terms that require ongoing human involvement throughout the policy life cycle.
The company also noted that structural characteristics of the commercial insurance market may slow the pace of AI-driven disruption. TD Cowen highlighted regulatory requirements such as licensing, audit trails and claims rights as factors limiting the ability of automated platforms to completely replace licensed intermediaries. As a result, analysts expect hybrid operating models to develop, with AI systems supporting brokers rather than replacing them.
TD Cowen said that while the firm did not expect widespread disintermediation in the medium term, AI was already starting to impact broking. Analysts point to automation of the underwriting submission portion, increased efficiency in placement workflows and better matching of risks to insurer preferences as examples of areas where the technology can improve productivity.
TD Cowen also believes that larger brokerage firms may be particularly well-positioned to benefit from the adoption of AI. Analysts say effective AI systems rely heavily on proprietary data sets generated from massive transactions and interactions with customers and insurers. Therefore, companies with extensive data, strong relationships, and significant capital resources may have an advantage in developing and deploying AI tools.
Analysts believe this dynamic is likely to strengthen the competitive position of established brokers, rather than allowing smaller entrants or startups to displace them.
The report also examines broader trends in insurance distribution, noting that direct-to-consumer channels have expanded in some areas. TD Cowen highlighted that taking personal motor insurance as an example, the proportion of direct distribution in sales has increased from approximately 16% in 2009 to approximately 30% in 2024.
Even so, analysts say other segments are still much less affected by direct distribution. In life insurance, for example, TD Cowen noted that direct channels account for only about 5% of U.S. individual policy sales.
Despite recent pressure on brokerage share prices, TD Cowen believes market valuations may reflect overly pessimistic assumptions about pricing trends and technological disruption. Analysts said their discounted cash flow model assumes near-term free cash flow growth of about 7.5% over five years, followed by 1.5% growth over the long term, suggesting average potential upside for brokerage stocks of about 19%.
While acknowledging that the long-term impact of AI remains uncertain, TD Cowen concluded that the technology is more likely to increase the efficiency and productivity of the brokerage industry rather than eliminate intermediary roles.
The firm said the recent sell-off in brokerage stocks appears to reflect concerns that may be exaggerated, although analysts noted the industry may continue to experience some short-term volatility.
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