Grit · 4 May 2026 · From the week of 4 May
How AIG Is Reinventing Insurance With AI | Peter Zaffino
These are notes on the conversation, checked against its transcript. The episode itself has the full discussion.
In brief
Peter Zaffino, chairman and CEO of AIG, speaks with host Joubin Mirzadegan about leading the turnaround of AIG's general insurance business, his career path, and how the company is embedding AI into underwriting and claims. He covers how catastrophe exposure, aggregate limits and reinsurance work, and what he looks for in executives. His central argument is that transformation needs some dissent and executive alignment, and that AI gains come when they are tied to a specific business purpose such as the underwriting workflow.
For founders
- Zaffino argues that a transformation with unanimous support in the room is probably not bold enough, and that some dissent is healthy.
- He says a partner's leadership should be aligned at the top before transformative work starts, since commitment and resources have to come from there.
- He says AI spending should be tied to a specific business or functional purpose, such as the underwriting workflow at AIG.
- He plans to take his board to Silicon Valley in June, because he wants directors to see what management sees.
- He ranks collaboration and alignment above almost any other executive quality, saying misalignment stops a company moving at speed.
For revenue leaders
- Zaffino says involving legal from the start means debating issues along the way rather than blocking late in the process.
- He says AIG's underwriting AI aims to get underwriters the most complete information in a fraction of the time, then use more compute to shape the portfolio.
- He says he prefers high-potential people be stretched beyond what they can handle, with the safety net set at the right height.
- He says the challenge is operationalising AI agents, employees and data into the organisation and realising a different business model.
- He says seeing AI tools live at tech companies differs from hearing about them, so he brings five or six team members along.
What was said 23, most useful first
Unanimous support for a transformation suggests it is not bold enough. Listen
Zaffino said that over many years he has learned that if a transformation has unanimous support in the room, the company is probably not going far enough. He said a team needs a little dissent and apprehension, while still knowing the change is pushing it somewhat. He presented this as a lesson from his experience over the course of many years.
“If you have unanimous support in terms of transformation, you shouldn't do it because it's not bold enough.”
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Zaffino put the Anthropic and Palantir leaders on AIG's AI investor day stage to make the commitment credible to investors. Listen
He said his executive team was nervous about over-promising timelines or committing to a partnership that was hard to deliver. He told them that if it failed it would be his fault, but if it succeeded they needed to get behind him. He chose those partners because he had strong relationships with them and their organisations were behind AIG, so he did not want a star effect with no lasting impact.
“if it fails with them and it's not going to, but if it does, it'll be a hundred percent my fault. But if it's successful, I need you to get behind me.”
Palantir engineers built different agents within 24 to 48 hours after being shown AIG's problems. Listen
Zaffino said he brings young Palantir engineers into conference rooms to show them what AIG is solving. They go away and return within a day or two with different agents. He said this partnership has produced unbelievable solutions for AIG.
“They'll crank out different agents within 24, 48 hours. They come back. We've found unbelievable solutions because of that partnership.”
AI spending should be tied to a very specific business or functional purpose. Listen
Asked about token budgets, he said the purpose must be specific, and at AIG it is the underwriting workflow. The aim is to get an underwriter as much perfect information as possible in a fraction of the time, then use more compute on models to shape the portfolio. He said the framework introduced at investor day a year earlier has advanced, and the next gains are in cycle time, data quality and getting information to underwriters faster.
“you need to be very specific on the business purpose or the functional purpose of what you're trying to deliver.”
AIG centralises catastrophe modelling and sets limits by geography rather than letting local leaders decide how much they will write. Listen
Zaffino said the modelling is managed centrally as well as locally, and it does not roll up from local business leaders deciding exposure. Instead the centre gives guidance on how much insurance and limit can be written in each major geography. He said the modelling uses deterministic, probabilistic and stochastic approaches, tested in several ways.
“we provide guidance as to how much insurance and how much limit we can write in every major geography.”
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Zaffino makes 'if I'm right, get behind me' calls rarely, because making them all the time leaves the leader making every decision with no one to hold them accountable. Listen
He said such conversations happen only for transformative moves or where there is reluctance in the room but he has strong conviction. He warned that if it happened all the time, the environment becomes one where the leader makes all the decisions. He said this kind of call does not come up often at AIG.
“if you do it all the time, it becomes a environment where you're making all the decisions, and, you know, who's going to hold me accountable to myself.”
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Transformative work with a partner requires alignment at the top of both organisations. Listen
He said commitment and resources have to come from leadership, which is why he tries to drive this principle at AIG. He said Palantir's CEO would be bold in deploying resources because he believes in what AIG is doing. He said the partnership has many connection points across levels of the organisations.
“if we're going to do transformative work with a partner, we need to be aligned at the top of the house because you need commitment. You need resources.”
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Insurers manage aggregate exposure in each area against what the balance sheet can absorb, and run out of capacity when that aggregate is used up. Listen
Zaffino explained that every policy adds to exposure in an area such as earthquake-prone California, so insurers apply probabilities and avoid too much concentration in one neighbourhood. He said aggregate is the sum of all exposures across policies, and that losses must stay within what the balance sheet can withstand. When companies say they have run out of potential aggregate, they have no more insurance to deploy.
“that's why companies, when you hear they run out of potential aggregate, it means they really don't have any more insurance to deploy”
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Zaffino doubts that California earthquake insurance is expensive relative to its exposure, saying a long quiet period is part of the reason it feels costly. Listen
He said the affordability and availability of cover is something AIG is always focused on. He noted that California has multiple catastrophe exposures, including earthquake and wildfire, and that Florida's main exposure is wind. He described California and Japan as more complicated for insurers to write.
“I don't know that earthquake insurance is that expensive relative to the exposure. We just haven't had something happen in a long time”
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AIG buys billions of dollars of reinsurance, led by four or five key partners, to hedge catastrophe losses. Listen
Zaffino said buying reinsurance requires extensive modelling, partnerships and transparency about the portfolio. Strong underwriting leadership at the reinsurers looks at the portfolio and decides how they want to participate, and the program is then syndicated through the rest of the market. He said four or five world-leading reinsurance partners know AIG's portfolio and risk appetite well. He gave a hypothetical in which a $3 billion earthquake or wind loss might leave AIG with around $500 million of exposure.
“we will buy reinsurance, billions of dollars of reinsurance to protect us and protect our balance sheet.”
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Collaboration and alignment matter more to him than almost any other executive quality. Listen
He said that once an executive is competent in their role, he would choose collaboration and alignment over almost anything else, because a company cannot change or lead without them. He said misalignment spreads a couple of layers into the company and prevents speed and quality. Intellectual curiosity, tested through respectful debate within a team, comes next on his list.
“I would take collaboration and alignment over almost anything else.”
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Bringing legal in from the start avoids late-stage vetoes on transformative work. Listen
Zaffino said that when legal is involved from the beginning, the team debates specific issues along the way rather than meeting a block at the end. He said that when the team works together, a decision usually becomes a discussion and debate rather than a yes or no. He acknowledged there are times when a business decision has to be made, but said it is great to get legal's input.
“if you have legal involved in the process from the beginning, you actually don't experience that latter part because you're debating specific issues along the way.”
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Zaffino gives people with rare all-round ability more than they can handle, with the safety net set at a height that matches the risk. Listen
He said when someone has enormous potential, you want to put them in the deep end, and you just need to know where the safety net is. He asked whether the net should be six feet or thirty feet below, or a hundred feet with no certainty of catching them. He said many people step up and take the opportunity when put under this kind of pressure.
“you want to put them in the deep end, you know, and have them walk the, you know, sort of tightrope, you just got to know where the safety net is.”
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Strong performance in one role does not guarantee success in the next, so career progression is not linear. Listen
Zaffino said some people who were very good in past roles would not be suited to what the future requires. He used a football analogy in which the fullback wants to be the centre and the centre wants to be the goalie. He argued that people need to understand their strengths and that combining different strengths makes a functioning organisation.
“you're really good at certain things and people are very good at other things and bringing that together is, is what makes, you know, a great functioning organization.”
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Zaffino tells rising executives that the role changes as they become more senior, because they cannot know the job until they have walked in those shoes. Listen
He said he tries to explain this to executives who share his aspirations. He said responsibilities, scope and lateral requirements change as people become more senior. He also said that as an assessor he must be honest that some people who did well in earlier roles will not be good for the future.
“until you walk in someone's shoes, you don't really know the roles, and, you know, things change.”
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The 9/11 attacks taught him to plan for tail events in exposure and the balance sheet, and to spread employees across buildings. Listen
He said that tail and black swan events must be considered in exposure management and the balance sheet, and that a company cannot be lured into believing its environment will not change. He said the world is more complicated than when the attacks happened, which affects how a company is run. He also said employees should not all be in one building, and some areas should be on lower floors.
“making sure that not everybody's in a single building or you know, that we're on lower floor sometimes in certain areas.”
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AI will transform businesses even if model progress stopped today. Listen
He said he 100% buys the AI hype and that it is for real. He said that even if time froze and other companies caught up, the technology would still transform businesses across insurance, banking and manufacturing value chains. He said agent orchestration could bring more accuracy, more insight and a speed of execution about 10 times faster.
“even if you froze time now and didn't make the progress, let everybody else catch up, it will still transform businesses.”
Large language model capabilities changed substantially within a year of AIG's Gen AI investor day. Listen
He said the Gen AI strategy shown a year earlier seemed aspirational, but he could not describe how different things are now. He cited better data ingestion, more autonomous data retrieval by LLMs, far fewer hallucinations and much greater data sources. He said he expects the pace of change to be as fast as or faster than this.
“the hallucinations are significantly less, data sources are much greater, and the pace of change as we look to the future we believe will be as fast if not faster.”
The hard part of AI is operationalising agents, employees and data into a different business model. Listen
He described managing employees, agents and data that flow into digital workflows, and asked how that will look in the future. He said applying this across the insurance, banking or manufacturing value chain is possible. Getting it into the organisation and realising it as a different business model is the challenge.
“how you operationalize that, how you actually get it into the organization, and realize it as a different business model. That is a challenge.”
AIG takes five or six team members to visit tech companies, because seeing AI work live is different from hearing it reported back. Listen
Zaffino said they travel with five or six people rather than an entourage, so that team members can learn from the host and his Kleiner Perkins colleagues and from other tech companies. He said bringing people along on the journey has been important and very beneficial to AIG.
“seeing it live is different than having it reported back to you. And so bringing them along for the journey, I think has been really important”
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AIG is taking its board to Silicon Valley in June so directors see what management is seeing on AI. Listen
Zaffino said the board members come from different backgrounds, with some strong in tech and others strong in financial services. He said the board discussion covers what AI will mean for AIG over time. He said management keeps presenting to the board and acknowledges what it knows and does not know.
“we're taking our board out here in June and gonna spend time here to make sure they're seeing what we're seeing.”
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AIG has about 25,000 employees and an almost equal number of full-time employee equivalents from outsourced partners. Listen
Zaffino gave this as the company's current size when asked about its workforce. The partner-based headcount is roughly equal to the direct employee count. He did not describe the split of roles between the two groups.
“We have about 25,000 AIG employees, and then we have almost the equal amount of full-time employee equivalents that have been, you know, with partners that have been outsourced.”
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Mirzadegan names availability as one of his favourite executive qualities, linking it to his fear that the business could die if it moves too slowly. Listen
Mirzadegan said that when he is accessible, others should feel accessible too, and that everybody needs to be available because he fears the company will die if the pace of the business is not fast enough. Zaffino agreed, saying they are cut from the same cloth and that he is never off. He confirmed he is up at 5 or 5:30 a.m. to catch UK business before lunch.
“I have this like deep fear that if the pace and rhythm of the business is not fast enough like we're just gonna die”
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