By Bill Alpert
Last month's debut of two insurance-selling chatbots knocked more than 10% off the stocks of insurance brokers like Marsh, Arthur J. Gallagher, and Goosehead Insurance. The stocks have mostly recovered, and investors seem no longer worried that artificial intelligence apps will steal brokers' commissions.
At BofA Securities, analyst Joshua Shanker thinks investors shouldn't be complacent about AI insurance agents. Over time, chatbots could eat into brokers' commissions on simple home and auto insurance policies. The AI threat is one reason he has had Sell ratings on Goosehead, Marsh and Aon.
The broker group was just one market sector seized by AI panic last month. New apps powered by OpenAI and Anthropic were revving their engines and investors envisioned their tire tracks down the backs of olde-tyme enterprise software firms and their private credit lenders.
Insurance distributors' stocks fell after Feb. 9 news stories described a couple of tools built on ChatGPT that were ready to sell personal auto and homeowners policies. As the broker most-focused on those lines, Goosehead shares fell almost 30% that week.
Goosehead remains down 0ver 20% from month-ago levels, but the others have largely reclaimed their losses as investors decided that commercially-focused brokers like Marsh, Gallagher, and Aon sell products too complex for a robot.
On its Feb. 17 earnings call, Goosehead told listeners that AI will be a help, not a hindrance. While auto insurance is a commodity, home insurance is not and involves a lot of service, Goosehead CEO Mark Miller told the audience.
"The majority of our clients still want some human guidance," Miller said. "So I think it's going to be difficult to disintermediate the clients."
BofA's Shanker is less sanguine about human exceptionalism. He points to a Munich Re app called Ergo Next, that is driven by a large language model and sells small business insurance. With Waymo robo-taxis ready to drive theatergoers through Time Square, he thinks that AI can a sell insurance to a stripmall florist in San Bernardino.
There are other reasons Shanker isn't a bull on insurance brokers. The stocks may be down nearly 25% from their year-ago peak, but he notes that they still trade at 22-times trailing earnings, as calculated under generally-accepted accounting principles. After adjustments the companies make for deals, acquisitions, and legal costs, the stocks only go for 15-times earnings before interest, taxes, depreciation and amortization. But Shanker thinks those adjustments are too liberal and overstate the brokers' earnings.
Given his qualms about the insurance brokers' earnings quality, Shanker says the stocks still trade at multiples that don't leave much room to allow for any AI disintermediation risk.
Write to Bill Alpert at william.alpert@barrons.com
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March 04, 2026 17:33 ET (22:33 GMT)
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