Tackling the misuse of AI in insurance coverage

“This yr, we wished to spotlight 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 a few of the key themes of EY’s newest ‘International Insurance coverage Outlook’ report, Isabelle Santenac (pictured), international insurance coverage chief at EY, emphasised the position that belief and transparency play in unlocking development. It’s a hyperlink put firmly beneath 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 traces amid the event of latest product ecosystems.

Tackling the difficulty 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 notably related contemplating the drive of the business to grow to be extra customer-focused and improve the loyalty of consumers, she stated, which requires prospects having belief in your model and what you do.

Zeroing in on the “exponential subject” that’s synthetic intelligence, she stated she’s seeing an excessive amount of recognition throughout the business of the alternatives and dangers AI – and notably generative AI – presents.

“One of many key dangers is how to make sure you keep away from the misuse of AI,” she stated. “How do you make sure you’re utilizing it in an moral method and in a method 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 employ? How do you guarantee the information you’re utilizing to feed your fashions is protected and proper? It’s a subject that’s creating a number of challenges for the business to deal with.”

Take a look at circumstances or use circumstances? How insurance coverage companies are embracing AI

These challenges aren’t stopping firms from everywhere in the insurance coverage ecosystem engaged on ‘proof of idea’ fashions for inner processes, she stated, however there’s nonetheless a powerful hesitancy to maneuver these to extra client-facing interactions, given the dangers concerned. a survey just lately carried out by EY on generative AI, she famous that real-life use circumstances 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 taking a look at it and everyone seems to be testing some proof of idea of it,” she stated. “However no-one is actually utilizing it at scale but which makes it tough to foretell the way it will work and what dangers it’s going to convey. I feel it’s going to take a little bit 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. Nevertheless it’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 know-how and the affect it’s going to 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 stated, and to look at the adverse connotations not utilising it appropriately or ethically may convey.

“Then however, AI may help you entry extra knowledge with a purpose to higher perceive your prospects,” she stated. “It could possibly allow you to higher goal what merchandise you wish to promote and which prospects try to be promoting them to. It could possibly assist you in getting higher at buyer segmentation which is totally crucial if you wish to serve your purchasers nicely. It could possibly assist inform who try to be partnering with and which ecosystems try to be a part of to raised entry purchasers.”

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 stated, from a course of perspective, from a promoting perspective and from an information perspective. It’s changing into more and more clear that it’s a pattern 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 feel it’s going to final,” she stated. “However we, as an business, want to totally perceive the dangers that come from utilizing it – bias, knowledge privateness considerations, ethics considerations and so forth. These are crucial dangers however we additionally have to recognise, from an insurance coverage business perspective, how these can create dangers for our prospects.

“For me, this presents an rising threat – how we will suggest safety round misuse of AI, round breach of information privateness and all of the issues that may grow to be extra important dangers with the usage of generative AI? That’s a priority which is simply rising, however the business has to replicate on that with a purpose to absolutely perceive the chance. For example, specialists are projecting that generative AI will improve the chance of fraud and cyber threat. 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 stated, or they run the chance 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, notably within the US. The very first thing for insurers to consider is the implications of their purchasers 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 aren’t protecting their purchasers for, or else threat repeating what occurred in the course of the pandemic with the enterprise interruption lawsuits and payouts.

“It’s vital to already know whether or not your present insurance policies cowl potential misuse of AI,” she stated. “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 precise framework and so forth, to make use of AI? Or do you wish to scale back the chance of this specific subject or probably exclude the chance? I feel that is one thing the insurers have to consider fairly rapidly. And I do know some are already eager about it fairly rigorously.”