Artificial Intelligence and insurance market development

Abstract

Insurance market development reflects the depth, quality, and efficiency of insurance systems and is commonly measured using insurance density (premiums per capita) and insurance penetration (insurance premiums as a share of gross domestic product). High values of these indicators relative to global averages signify a well‑developed insurance market. This article examines the role of artificial intelligence (AI) in advancing insurance market development within the broader context of economic growth. It situates the discussion within established theoretical perspectives on the finance–growth nexus, namely the supply‑leading, demand‑following, complementarity, and neutrality hypotheses. By enhancing operational efficiency, risk assessment accuracy, product innovation, and service delivery, AI has the potential to influence both the supply and demand sides of insurance markets. The paper argues that AI-driven transformation in the insurance sector may strengthen the interdependence between insurance development and economic growth, particularly in emerging economies. The study highlights AI as a strategic tool capable of improving insurance density and penetration, thereby contributing to broader financial development and economic performance.