Canadian insurance is trailing other industries and other countries on AI deployment, and most carriers have yet to move past early experimentation, but the competitive threat to brokers is already materializing, according to Duncan Meadows (pictured), partner, insurance business transformation and property and casualty leader at EY Canada.
"In terms of generative and agentic AI, insurance is probably behind some other industries, and Canada is probably behind some other geographies," Meadows said. "Most companies would characterize themselves as being at the proof-of-concept stage."
He said generative AI – tools used for research, summarization and note-taking – has seen the broadest uptake so far. Agentic AI, which can autonomously execute tasks or entire workflows, will likely be more impactful in the medium term but is not maturing anywhere in the Canadian market yet.
Where AI is being deployed most is not in distribution. Meadows said carriers are directing resources toward underwriting and claims first, where the economics are strongest, better pricing accuracy on the underwriting side and faster, cheaper claims handling on the indemnity side.
"Distribution is probably not the place where there's the most AI deployment so far," he said.
The reason is partly caution. Meadows said carriers are conservative about using AI in customer-facing interactions and prefer to test it internally before exposing it to policyholders. Contact centres are the main exception – automated note-taking, next-best-action prompts and AI-enabled chatbots are relatively common – but broader distribution applications remain in early stages.
That hesitancy has not stopped others from moving. Meadows pointed to the launch of Insurify, an AI-powered insurance comparison platform in the United States, as a signal the market is already pricing in broker disruption.
"There were some pretty big hits in terms of US broker stock price," he said. "The market are making some bets that in the medium term, small and medium-sized commercial insurance may be digitized to some degree."
He said the Canadian broker channel still holds a much higher market share than comparable countries, and that will not collapse overnight. Canada has shown a strong societal preference for face-to-face interaction, and brokers will persist for as long as that demand exists.
"Brokers will still persist as long as humans want face-to-face interaction," Meadows said. "Canada is a market that has shown societally there's still a large prevalence of people who want face-to-face interaction."
But the segment most exposed to AI disruption is also the easiest to identify. Meadows said younger, price-sensitive, digitally native consumers – the ones already comfortable buying online and less attached to any single brand – are the first to leave the broker channel for an AI-powered alternative.
"If you're 30 years old, looking for the best price, [you are] price sensitive, less brand loyal, you're more likely to use an Insurify or another AI-enabled comparison tool," he said.
That shift introduces a new competitive dynamic. In a world where consumers are asking an AI to recommend the best policy based on a set of criteria, traditional advantages like brand recognition and broker relationships matter less. What matters is how a product performs in an algorithmic comparison – pricing, features, coverage, ratings.
Meadows said consolidation in the broker and carrier space will continue regardless of AI. Scale advantages dominate, and the economics of the industry push toward fewer, larger players over time.
"In both the core brokerage and carrier space, consolidation is regardless of AI and will likely continue," he said.
But AI also opens the door from the other direction. Meadows said new entrants – digital brokerages, AI-native comparison platforms, new MGAs – could use the technology to compete in ways that were not viable before.
"AI presents opportunities for new entrants," he said. "Whether those are new digital brokerages or comparison insurance players, or maybe new MGAs or carriers."
The net picture for Canadian brokers is not existential – not yet. But the window in which the industry can afford to stay at proof of concept while the competitive landscape moves ahead is narrowing.
"We're not at the leading edge of AI deployment yet in Canada, but with the amount of focus on AI, I expect the insurance landscape to shift a fair amount over the coming years," Meadows said.
