The growing use of AI in FinTech presents both opportunities and risks that insurance underwriters are closely monitoring.

On the opportunity side, AI enables FinTech companies to offer more personalized services, such as analyzing spending habits and financial goals to anticipate customer needs. AI can also improve 24/7 support and access to tailored products. Insurance underwriters generally view these enhancements positively, with no significant impact on insurance pricing or availability.

However, risks are emerging—particularly concerning AI washing, which is to say any instance in which a company may overstate its AI capabilities. This is especially relevant for D&O liability coverage, notably for public companies or those with investment adviser or broker-dealer licenses. Underwriters are tracking AI mentions in earnings calls to assess consistency and potential exposure and looking more closely at adviser and broker-dealer marketing materials.

While underwriting guidelines haven’t drastically changed, insurers are asking more detailed questions about AI oversight and controls. Lenders using AI in underwriting models, and investment firms using AI in marketing or client interactions, should expect increased scrutiny. Overreliance on AI without proper governance could affect insurance terms with most carriers taking a conservative (read: more costly and more exclusions) approach.