Gen AI: If you don't buy, you lose
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Digital Tuesday Generative artificial intelligence (Gen AI) can be an extremely helpful tool in mergers and acquisitions. Risks, weaknesses in claims processing or outdated wordings become visible even before the purchase contract is signed. However, Gen AI could also become a driver of consolidation in the insurance industry itself. Companies that integrate AI into their operating models in a scalable way become interesting acquisition candidates.
Generative AI offers a massive efficiency advantage in the due diligence of mergers and acquisitions (M&A). AI agents analyze large volumes of contract, inventory, and claims files not only faster, but also more deeply – with a contextual understanding that significantly surpasses traditional OCR and search methods. Risks, weaknesses in claims processing or outdated wording become visible even before the purchase contract is signed.
In addition, target companies and portfolios can be compared in a standardized manner – a clear advantage in bidding processes or strategic buy-and-build plans. For private equity investors or corporate development teams, this means better decisions in less time with fewer risks.
Post-transaction relevance – integration and value creation
Even after the deal, Gen AI will play a central role. It helps to identify differences in processes, systems and documentation logics between the buyer and the target at an early stage. This makes integration more predictable – often the most critical success factor in M&A.
In addition, AI opens up real value creation potential in the portfolio: better claims triage, automation of repetitive tasks, optimized underwriting rules. Anyone who takes over an "old-school" organization can use their own AI know-how to set up processes anew – and thus realize synergies that were previously considered elusive.
Generative AI as a strategic deal trigger
It gets even more exciting on the strategic level: Gen AI itself becomes a reason to buy – or sell – a company. As soon as the first market participants start to integrate AI into their operating models in a scalable way, the competitive structure will change drastically. Those who do not bring AI into production early on – pilot projects do not reduce costs – will quickly fall behind.
It can therefore make sense to take over a competitor that is already further along in terms of AI – and thus make a technological leap. Conversely, companies with strong AI maturity can deliberately buy inefficient competitors in order to "leverage" them with the help of their own transformation capability.
The US market provides a prominent example: Munich Re recently acquired the digital insurer Next – at a multiple of around five times the premium. In classic transactions, this value is more likely to be one to two. The assessment reflects the AI-based efficiency and scalability of the model.
A look at the stock market also shows the potential: While Amazon (hybrid business model, but highly technical) is valued at three times the profit, top insurers such as Allianz or Axa are listed below one, although they are three times as profitable. This is an incredible opportunity for companies in the insurance sector. Good for the board members and investors who recognize this in time.
We are still at the beginning of AI development. But it will come sooner than most people think. And it will result in a veritable wave of M&A in the insurance industry. The motives are changing: Whereas in the past it was mainly about economies of scale and market share, in the future it will be about significantly faster processing, lower costs and far better service.
Gen AI will have a double impact: as a tool for better evaluation and integration – and as a strategic trigger for new, data-driven transactions.
One thing is clear: consolidation will continue. But the winners will not necessarily be the biggest – but those who act the fastest.