In 2025, 87% of commercial lines insurance in the United States was sold through independent agencies, a share that has edged upward over the past decade even as personal lines has shifted decisively toward direct digital channels, according to VCA Software, P&C Industry Trends 2026. What has changed is not the dominance of the agency channel. It is what agents expect from the carriers they choose to place business with, and how quickly a carrier that cannot meet those expectations gets replaced at renewal.
Four years of a hard market let carriers raise premiums and still retain accounts because policyholders had limited options. That window is closing. With rates normalizing in several commercial lines and carrier appetite returning, competition for the best accounts is intensifying. The carriers best positioned are not simply the ones with the most favorable loss ratios. They are the ones that made it easiest for agents to place business with them, and used data to understand exactly where the ceiling on rate increases lay before policyholders shopped elsewhere.
Christian Egoavil, senior director of carrier data and connectivity at Vertafore, has spent more than two decades working with carriers on distribution strategy. He describes the competitive shift directly. During the hard market, energy went into ensuring rate increases were sufficient to protect loss ratios. Now, with rates becoming more predictable, the priority has changed. “In the past they used to go for growth, meaning large appetite, bring in as much as we can,” he said. “Today the focus has changed to more profitable growth, things that we know are going to hit the bottom line in a positive manner.”
Digital distribution sits at the center of that strategy. A commercial agent working with ten different carriers learns ten different submission workflows. Egoavil identifies the key priority as standardizing those workflows onto the agent’s existing platform, rather than routing agents to separate carrier portals to complete transactions. Carriers that embed their products where agents already work make themselves easier to place with and, by extension, harder to abandon at renewal.
The challenge is acute in commercial lines, where submissions involve layered exposures and a level of judgment that resists full automation. According to research from Everest Group, more than 50% of underwriter time is still consumed by data extraction and email follow-up, while fewer than 25% of complex commercial risks flow through straight-through processing without manual intervention (Sutherland Global, 2026). Carriers capable of reducing that friction gain a structural advantage in submission volume and agent preference that shows up directly in retention.
Jerry Theodorou, policy director for insurance, finance and trade at the R Street Institute, offers a measured read on commercial lines AI deployment. “AI is a tool, and it assists, it doesn’t replace,” he said. In personal lines and standard small commercial, straight-through processing is rising. In the excess and surplus lines market, which handles complex unique exposures that admitted carriers decline, full automation remains distant. The E&S underwriter with 20 years of experience is precisely the kind of human judgment that AI supplements rather than replaces.
The adoption divide between large publicly traded carriers and smaller regionals is consequential. Companies such as Chubb, Travelers, and Hartford disclose AI strategies in quarterly earnings reports where investor scrutiny creates accountability. Smaller carriers, and there are roughly 4,000 property and casualty insurers in the US, are more cautious. Theodorou frames their posture through Amara’s Law: near-term AI impact is consistently overestimated while the 10-year transformation is consistently underestimated. Carriers waiting to see proven applications before committing are managing real liability exposure. “You can’t abdicate your responsibility as an underwriter to do risk selection and risk pricing,” he said.
His illustration of the hallucination risk is pointed: when asked to identify US states with the lowest natural catastrophe exposure, a leading AI system placed Wisconsin and Michigan near the top of the list, both states that have experienced hail storms and winter events severe enough to impair multiple regional carriers. For fraud detection, however, Theodorou sees a lower-friction near-term opportunity. “If I were to point to one area to start with, that would be fraud detection,” he said. “You get benefits within a couple of years instead of way down the line.” Cross-referencing claims data against public records and visual data at the scale AI enables represents accessible gains for carriers of most sizes, without the precision demand of complex underwriting.
Where carriers are finding their clearest competitive edge in a softening market is not through AI models but through better use of data about their own books. Egoavil draws the distinction directly. “It all comes back to data over technology,” he said. “Data is where it’s extremely helpful to understand what the market’s doing and what the opportunities are to drive profitable growth. Technology is a tool that helps create streamlining or automation for an interaction.”
The most commercially powerful version of that capability is renewal intelligence. A carrier that raised premiums by 10% can observe, through renewal data, whether that triggered competitive shopping. If industry-wide data shows meaningful attrition at 14%, the carrier knows approximately where its ceiling is without testing it on its own accounts. “It’s giving carriers the understanding of what the ceiling of rate increases is,” Egoavil said, “so they know at what point they can drive a rate increase which they need to do, but still retain the business versus triggering shopping in the marketplace.”
Personal lines distribution has been ahead of commercial on digital capability for nearly a decade. The ability to compare carrier rates and bind policies from a single agent platform, without bridging to a separate carrier portal, is now standard in personal auto and homeowners. Egoavil sees commercial following the same trajectory. Carriers are becoming more open to allowing agents to complete transactions on the broker’s own platform. The shift is already underway in smaller commercial classes; mid-market and specialty lines will follow as submission automation matures and carriers can communicate their appetite parameters in real time.
The C-suite framing is direct. Digital investment in commercial lines is no longer primarily an internal operational expense. It is the infrastructure for making the carrier easier to place with, harder to move away from, and better positioned to understand where its most profitable accounts sit and what it would take to lose them. The carriers building that infrastructure now, before the competitive soft market pressure fully arrives, are building it on their own terms.
