Attending to grips with the misuse of AI in insurance coverage

“This yr, we wished to spotlight the recurring theme of the worldwide safety hole from a distinct 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), world insurance coverage chief at EY, emphasised the function that belief and transparency play in unlocking development. 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 behaviors 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 heart of discovering alternatives in addition to challenges amid a lot disruption. That is notably related contemplating the drive of the business to turn out to be extra customer-focused and improve the loyalty of shoppers, she stated, which requires prospects having belief in your model and what you do.

Zeroing in on the “exponential matter” 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 information 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 protected and proper? It’s a subject that’s creating lots of challenges for the business to sort out.”

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

These challenges usually are not stopping corporations from everywhere in the insurance coverage ecosystem engaged on ‘proof of idea’ fashions for inside processes, she stated, however there’s nonetheless a robust hesitancy to maneuver these to extra client-facing interactions, given the dangers concerned. Taking a look at 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 admittedly utilizing it at scale but which makes it troublesome to foretell the way it will work and what dangers it should deliver. I believe it should take just a little 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 impression it should inevitably have on the opposite urgent themes outlined by EY’s insurance coverage outlook report for 2024. No present dialog about buyer behaviors or model fairness can afford to not discover the potential for AI to impression a model, she stated, and to look at the detrimental connotations not using it appropriately or ethically may deliver.

“Then however, AI can assist you entry extra information with the intention to higher perceive your prospects,” she stated. “It might provide help to higher goal what merchandise you wish to promote and which prospects you ought to be promoting them to. It might assist you in getting higher at buyer segmentation which is completely essential if you wish to serve your purchasers effectively. It might assist inform who you ought to be partnering with and which ecosystems you ought to be a part of to higher entry purchasers.”

It’s the pervasive nature of generative AI which is setting it aside from different ‘flash within the pan’ buzzwords corresponding to Blockchain, the Web of Issues (IoT) and the Metaverse. Already AI is touching so many components of the insurance coverage proposition, she stated, from a course of perspective, from a promoting perspective and from a knowledge 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 corporations have to be excited 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 should final,” she stated. “However we, as an business, want to completely perceive the dangers that come from utilizing it – bias, information privateness considerations, ethics considerations and so on. These are essential dangers however we additionally want to acknowledge, from an insurance coverage business perspective, how these can create dangers for our prospects.

“For me, this presents an rising danger – how we are able to suggest safety round misuse of AI, round breach of information privateness and all of the issues that can turn out to be extra important dangers with using generative AI? That’s a priority which is simply rising, however the business has to mirror on that with the intention to totally perceive the danger. As an example, specialists 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 provide to cowl these new or rising dangers?”

Insurance coverage corporations should begin excited about these questions now, she stated, or they run the danger of being left behind as additional developments unfold. That is particularly related on condition 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 coated of their insurance coverage coverage. Insurers have to be very conscious of what they’re and usually are not protecting their purchasers for, or else danger repeating what occurred throughout the pandemic with the enterprise interruption lawsuits and payouts.

“It’s necessary 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 best framework and so on, to make use of AI? Or do you wish to scale back the danger of this explicit matter 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 excited about it fairly rigorously.”