US insurers hit record highs as Wall Street rotates from AI darlings to defensive plays

Wall Street’s insurance stocks just hit their best levels ever, and the catalyst is almost poetic: the same AI revolution that was supposed to disrupt them is now scaring investors away from tech and into their arms. The S&P 500 Insurance Index reached an all-time high on Tuesday as traders executed a textbook defensive rotation, pulling capital from AI-exposed technology names and funneling it into sectors that tend to hold up when the mood gets nervous. The AI paradox hitting insurance stocks Earlier this month, US insurance broker stocks dropped roughly 3.9% in a single session after new AI tool launches stoked fears about disruption. The concern was straightforward. If AI can automate underwriting and claims processing, maybe you don’t need as many brokers. But the broader insurance industry has been quietly absorbing AI rather than getting steamrolled by it. Projections suggest AI adoption could deliver efficiency gains of 15-22% for life insurers by 2028, translating into meaningful cost savings and revenue bumps. The global AI-in-insurance market itself is expected to grow at a compound annual growth rate exceeding 30% through 2035, potentially reaching hundreds of billi...