Playing Checkers when the Game is Chess

I read an article in Carrier Management (Dec 18, 2025) about how insurance companies are pairing AI and process engineering to drive subrogation outcomes. The immediate thought that came to mind is that carriers are not culturally or intellectually ready to do this.

Most insurance companies and agencies are horrible strategic planners. Sure, they go through the motions, and many pay hundreds of thousands to consultants to build strategic plans. What is missing besides a lot? A key element frequently missing is consideration of what the competition will do in relation to your move. Carriers seem to expect that if they lower rates, no one else will.

The best example of this is how virtually every commercial carrier is slobbering over small commercial. When every single carrier wants so much small commercial, the U.S. economy needs to materially expand to fulfill all those appetites, it indicates no one has thought through all their competitors wanting exactly what they want. At this point, carriers are holding agencies hostage by requiring that if they don’t generate $X small commercial, they are unlikely to earn a material contingency. If a carrier cannot develop a better strategy than this, you know it doesn’t have one.

A true strategy, one that requires deep versus shallow thought, requires consideration of what happens when you take an action. What is the response of your agents and your competitors? If you decrease rates by 10%, do your key competitors decrease rates by 10%? If they decrease rates 10%, are they in a strong enough financial position to hold that decrease, or can they only hold their breath for a short time? Is this a game of attrition, or do you need blitzkrieg success? If these points are not in your strategic plan, you do not have one. You have a wish list.

This lack of thinking through reactions applies to AI usage. Let’s make a few large assumptions. First, let’s assume that every carrier employs high-quality AI and can provide the system with high-quality data. Let’s also assume that AI generates success, whether in subrogation or any other facet.

If all firms use AI to drive success in subrogation, what happens next? Against whom are they subrogating? If it is other insurance companies and they have employed quality AI, I’m not so sure success is guaranteed. The article assumes the other parties do not use their own sophisticated methods to avoid writing a check. No one needs AI if the other party is willing to write a check, or even if they just forgot to put it in the mail. There is a reason they haven’t paid, and AI or whatever magical system they buy might just be cheaper than writing checks, especially if the other parties are insurance companies and large companies.

The expectation seems to be that carriers can move their bishops into vulnerable positions that are not vulnerable in their minds because they cannot fathom that the other side will deploy their own forces. Every strategy requires anticipating what the other party will do.

And maybe that is what AI can help with the most. Maybe it can think through what the other side will do. If so, we don’t need the executives and consultants to develop a strategy. Maybe that’s where the real savings will be generated.

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