US insurance brokerage stocks faced a significant downturn on Monday, driven by market concerns over industry disruption following the launch of an artificial intelligence tool by private online insurance marketplace Insurify. The S&P 500 Insurance Index closed down 3.9%, marking its largest single-day decline since October of last year.

Willis Towers Watson PLC (WTW.US) was the worst performer among insurance brokers, closing 12% lower and experiencing its most severe trading session since November 2008. It was followed by Arthur J Gallagher & Co. (AJG.US), which fell 9.9%, and Aon PLC (AON.US), which dropped 9.3%.

Insurance industry analyst Matthew Palazola commented, "Insurance broker stocks are taking a heavy hit," noting that "the market may have concerns regarding Insurify's new tool as well as new AI tools from Anthropic." He added that while these applications "could pose a threat to some advisory services of insurance brokers, we view them more as 'efficiency multipliers' rather than existential threats."

Insurify's application utilizes ChatGPT, combining vehicle details, customer credit history, driving records, and other inputs to compare auto insurance rates. The company stated that the application became available on February 3.

Investor apprehension about how new AI applications could disrupt multiple industries impacted the stock market sharply last week. This was primarily triggered by new tools released by AI startup Anthropic, which are designed to automate various work tasks related to legal services, data processing, and financial research.