Tackling the misuse of AI in insurance coverage

“This yr, we needed to focus on the recurring theme of the worldwide safety hole from a unique angle – analyzing how the insurance coverage business can restore belief and ship extra societal worth.”

Exploring among the key themes of EY’s newest ‘World Insurance coverage Outlook’ report, Isabelle Santenac (pictured), international insurance coverage chief at EY, emphasised the position that belief and transparency play in unlocking progress. It’s a hyperlink put firmly underneath the microscope within the annual report because it examined how the insurance coverage market is being reshaped by a number of disruptive forces together with the evolution of generative AI, altering buyer behaviours and the blurring of business strains amid the event of recent product ecosystems.

Tackling the problem of AI misuse

Santenac famous that the interconnectivity between these themes is grounded in the necessity to restore belief, as that is on the centre of discovering alternatives in addition to challenges amid a lot disruption. That is significantly related contemplating the drive of the business to develop into extra customer-focused and improve the loyalty of consumers, she mentioned, which requires prospects having belief in your model and what you do.

Zeroing in on the “exponential subject” that’s synthetic intelligence, she mentioned she’s seeing quite a lot of recognition throughout the business of the alternatives and dangers AI – and significantly generative AI – presents.

“One of many key dangers is how to make sure you keep away from the misuse of AI,” she mentioned. “How do you make sure you’re utilizing it in an moral manner and in a manner that’s compliant with regulation, particularly with knowledge privateness legal guidelines? How do you make sure you don’t have bias within the fashions you utilize? How do you guarantee the information you’re utilizing to feed your fashions is secure and proper? It’s a subject that’s creating quite a lot of challenges for the business to sort out.”

Check instances or use instances? How insurance coverage companies are embracing AI

These challenges are usually not stopping firms from everywhere in the insurance coverage ecosystem engaged on ‘proof of idea’ fashions for inner processes, she mentioned, however there’s nonetheless a powerful hesitancy to maneuver these to extra client-facing interactions, given the dangers concerned. a survey lately carried out by EY on generative AI, she famous that real-life use instances are nonetheless very restricted, not solely within the insurance coverage business but additionally extra broadly.

“Everyone seems to be speaking about it, everyone seems to be it and everyone seems to be testing some proof of idea of it,” she mentioned. “However no-one is admittedly utilizing it at scale but which makes it troublesome to foretell the way it will work and what dangers it’ll carry. I believe it’ll take slightly little bit of time earlier than everybody can higher perceive and consider the potential dangers as a result of proper now it’s actually nascent. But it surely’s one thing that the insurance coverage business has to have on its radar regardless.”

Understanding the evolution of generative AI

Digging deeper into the evolution of generative AI, Santenac highlighted the pervasive nature of the expertise and the affect it’ll inevitably have on the opposite urgent themes outlined by EY’s insurance coverage outlook report for 2024. No present dialog about buyer behaviours or model fairness can afford to not discover the potential for AI to affect a model, she mentioned, and to look at the destructive connotations not utilising it accurately or ethically may carry.

“Then alternatively, AI may help you entry extra knowledge with the intention to higher perceive your prospects,” she mentioned. “It will probably allow you to higher goal what merchandise you wish to promote and which prospects you need to be promoting them to. It will probably assist you in getting higher at buyer segmentation which is completely essential if you wish to serve your shoppers properly. It will probably assist inform who you need to be partnering with and which ecosystems you need to be a part of to raised entry shoppers.”

It’s the pervasive nature of generative AI which is setting it other than different ‘flash within the pan’ buzzwords comparable to Blockchain, the Web of Issues (IoT) and the Metaverse. Already AI is touching so many parts of the insurance coverage proposition, she mentioned, from a course of perspective, from a promoting perspective and from an information perspective. It’s turning into more and more clear that it’s a development that’s going to final, not least as a result of machine studying as an idea has already been round and in use for a very long time.

What insurance coverage firms should be eager about

“The distinction is that generative AI is a lot extra highly effective and opens up so many new territories, which I why I believe it’ll final,” she mentioned. “However we, as an business, want to completely perceive the dangers that come from utilizing it – bias, knowledge privateness issues, ethics issues and many others. These are essential dangers however we additionally must recognise, from an insurance coverage business perspective, how these can create dangers for our prospects.

“For me, this presents an rising danger – how we will suggest safety round misuse of AI, round breach of information privateness and all of the issues that can develop into extra vital dangers with the usage of generative AI? That’s a priority which is simply rising, however the business has to replicate on that with the intention to totally perceive the danger. As an example, consultants are projecting that generative AI will improve the danger of fraud and cyber danger. So, the query for the business is – what safety are you able to supply to cowl these new or growing dangers?”

Insurance coverage firms should begin eager about these questions now, she mentioned, or they run the danger of being left behind as additional developments unfold. That is particularly related provided that some litigation has already began across the use and misuse of AI, significantly within the US. The very first thing for insurers to consider is the implications of their shoppers misusing AI and whether or not it’s implicitly or explicitly lined of their insurance coverage coverage. Insurers should be very conscious of what they’re and are usually not protecting their shoppers for, or else danger repeating what occurred throughout the pandemic with the enterprise interruption lawsuits and payouts.

“It’s essential to already know whether or not your present insurance policies cowl potential misuse of AI,” she mentioned. “After which if that’s the case, how do you wish to deal with that? Ought to you make sure that your consumer has the proper framework and many others, to make use of AI? Or do you wish to scale back the danger of this explicit subject or probably exclude the danger? I believe that is one thing the insurers have to consider fairly rapidly. And I do know some are already eager about it fairly rigorously.”