After SaaSocalypse And Cybersecurity Sell Off, This $15 Billion Sector Could Be The Next Target

BofA Global Research has warned that artificial intelligence (AI) disintermediation could put over $15 billion of the insurance industry at risk.

BofA’s research analysts suggest that a significant portion of “low complexity” insurance industry commissions are at risk of disruption due to AI. This comes in the wake of a jolt to the subsector following the launch of chatbot assistants by digital insurance companies, Insurify and Tuio, using ChatGPT technology, reported Fortune.

BofA maintains a bearish outlook on the insurance distribution stocks. The firm identified over $15 billion in commissions paid to independent agents in 2025 by six major carriers, including Progressive Corp(NYSE:PGR), Travelers Companies  (NYSE:TRV), Hartford Insurance Group (NYSE:HIG), and Cincinnati Financial (NASDAQ:CIFN), Hanover Insurance (NYSE:THG), and Selective Insurance Group(NASDAQ:SIGI), which primarily cater to low-complexity risks.

BofA noted that standard home and auto insurance are low-complexity products where human agents provide limited value, and that direct-to-consumer digital channels could substantially lower costs for buyers. The firm also highlighted that deploying large language model (LLM) chatbots is inexpensive, straightforward, and already underway, with companies like Next Insurance integrating AI chatbots on their websites.

BofA advises investors to scrutinize the insurance distribution sector, warning that stocks may underestimate risks. The firm notes that agencies currently expected to grow 3–7% organically could see growth slow to 1–5% due to disruptive technology.

AI Shakes Software, Cybersecurity

The insurance industry is not the only sector feeling the heat from AI. In February, the software sector experienced a ‘SaaSpocalypse,’ with AI posing an existential threat to the industry’s business model. The sell-off sent several industry giants like Salesforce Inc. (NYSE:CRM), Atlassian Corp. (NASDAQ:TEAM), Zscaler, Inc. (NASDAQ:ZS) and Workday, Inc. (NASDAQ:WDAY) to 52-week lows.

Additionally, Anthropic’s new AI tool, Claude Code Security, shook the cybersecurity sector by autonomously hunting down software vulnerabilities and proposing fixes.

CrowdStrike (NASDAQ:CRWD), Cloudflare (NYSE:NET), Gitlab (NASDAQ:GTLB), and Okta (NASDAQ:OKTA) witnessed a massive sell-off subsequently. These developments highlight the growing influence of AI across various industries and the potential risks it poses to traditional business models.

HSBC, however, dismissed fears of AI displacing the SaaS sector, forecasting that software companies are more likely to benefit from AI advancements rather than face a "SaaSpocalypse."

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.

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