As artificial intelligence becomes more widespread, its integration into actuarial work brings both opportunities and challenges. Actuaries, who rely on detailed modeling and transparent risk assessment, must find a balance between new technology and professional judgment.
Dr. Michel Léonard, chief economist and data scientist at the Insurance Information Institute (Triple-I), addressed these issues in a recent interview for the Casualty Actuarial Society Institute’s podcast. “The challenge is not that there’s too much data – it’s having an awareness of what you’re looking for and then finding it,” said Léonard. “If you look at all the data and it’s not focused and translated, the signal is not going to be what you need.”
Léonard pointed out that many AI models are trained on various language sources, making understanding and preparing data critical when dealing with so-called “black box” algorithms. These models can be opaque about how they reach decisions. To use AI effectively in risk assessment, insurance companies must show how their models work and maintain clear actuarial records, particularly for regulators and the public.
He gave the example of dynamic wildfire models: although these show that risks are becoming more frequent and severe, continued transparency about their workings will help build trust between regulators and the industry. Léonard stated this transparency is essential for connecting regulators with insurers.
Despite improvements in real-time access to detailed data through such models, significant information gaps remain—especially after the 2025 federal government shutdown delayed or left permanent holes in important economic surveys on employment, inflation, and other indicators. This situation has increased uncertainty as decision-makers move into 2026.
“Because of this uncertainty, we’re forecasting on the trend, which means that we cannot stress test or include validation for those stress tests,” Léonard said. “The lack of data on the U.S. economy is the main challenge for us right now.”
Current tariff policies targeting materials used to repair or replace property after insured events add another layer of complexity. While insurers avoided major market instability like that seen during COVID-19 last year by stockpiling goods ahead of tariffs, this may have hidden some effects of those policies.
A pending decision will influence future tariff policies; until then global markets face possible cost increases. Still, Léonard highlighted the insurance sector’s ability to manage unpredictable events: “that’s why we have a reasonable and adequate [capital]” along with other resources to keep consumers protected.
The Insurance Information Institute provides resources in English and Spanish for stakeholders including consumers, media, and policymakers through its official website. It also established ties with The Institutes in November 2020 (source). Representing over 50 member companies—regional, national, and global carriers—the organization aims to deliver data-driven insights on risk management (source). As a leading online source for insurance information via its website, blog, and social media channels (source), Triple-I also hosts events to promote understanding of insurance topics (source).
