How AI and Cloud Computing Drive Efficiency and Precision in Small Commercial Insurance

AI and Cloud Computing Transform Small Commercial Insurance

Technology is driving much-needed change in small commercial insurance underwriting and distribution. After years of slow progress, new tools are improving efficiency and accuracy.

Small Commercial Capacity Is Finally Changing

Small commercial insurance capacity has been stagnant for too long. According to Athula Alwis, this inefficiency and lack of innovation motivated the creation of AllDigital Specialty Insurance. The goal: overhaul underwriting processes and modernize distribution in a market that had grown complacent.

MGAs and Digital Infrastructure Fuel Progress

Legacy insurers often struggle to innovate because many employees juggle multiple roles, leaving little time for transformation. Large insurers have resources but complex structures that hinder change. On the other hand, Managing General Agents (MGAs) have adopted new technologies and alternative distribution models, setting the pace for the sector.

Central to this progress is building digital connections—what Alwis calls “digital bridges” or tunnels—that link partners and carriers. These connections increasingly rely on artificial intelligence (AI), not to replace underwriters, but to enhance selection, speed decisions, scale processes, and reduce errors. In a heavily regulated environment, improving efficiency is essential.

AI Boosts Precision and Speed

Since its launch in January 2021, AllDigital has implemented two AI systems, including one supporting its Lloyd’s operation. The company has written over $100 million in premium, a scale made possible by cloud computing. Cloud architecture levels the playing field, enabling newer companies to operate without legacy system burdens.

But scale is only part of the story. The key is precision in risk placement. The AI system was trained over six to nine months by experienced underwriters in a human-in-the-loop process, ensuring ongoing learning. The result: bindable quotes are now delivered in two to three minutes via self-service, a significant improvement over the previous multi-day turnaround.

Digital efficiency also helps maintain a shared and accurate record among carriers, brokers, and administrators. Technologies like blockchain and Salesforce support this unified platform, reducing disputes and streamlining operations.

Selective Targeting and Embedded Insurance Limitations

Even during market disruptions, such as the 2022 spike in employment practices liability claims, the AI system has proven reliable. The company avoids sectors with poor data quality or where the model lacks confidence. Brokers closest to customers—especially retail firms linked to large wholesalers—tend to perform better.

AllDigital is deliberately avoiding embedded or usage-based insurance products. The economics often don’t work due to low premiums and high integration costs. Their focus remains on higher-margin, data-rich opportunities. Before investing, they carefully assess premium volume and margins to ensure a sustainable model.

A Focused Model Built on AI and Trust

Currently, AllDigital partners with 17 to 18 brokers, reflecting a strategy focused on deepening relationships rather than rapid headcount growth. Their emphasis on AI-driven decision-making across the ecosystem sets them apart in a market still figuring out how to grow profitably without sacrificing quality.

Ultimately, AllDigital’s approach changes how specialty commercial insurance is handled. Faster quotes and scalable underwriting are part of it, but the real edge comes from combining cloud computing, machine learning, and permission-based blockchain to rework the underwriting process itself.