Almost nine in 10 (87 per cent) senior insurance professionals are “concerned” about bias or unfair outcomes in AI-driven processes, research from embedded insurance provider EIP has revealed.
The research, which surveyed 250 senior insurance professionals across the UK and Europe, also found 23 per cent were concerned about data security and privacy concerns.
This was ahead of regulatory non-compliance, and system reliability and errors, both which was mentioned by 21 per cent of respondents, and job displacement or staff resistance, mentioned by 20 per cent.
Meanwhile, for larger firms, regulatory concerns were the biggest concern, mentioned by 33 per cent of respondents.
Despite this concern, 90 per cent said they expect their claims administration to be managed end-to-end by AI within the next 24 months.
EIP founder and CEO, Ross Sinclair, said: “Insurance is, by necessity, a heavily regulated industry, which makes introducing AI complicated.
“This research shows that the development of industry-specific capabilities could help to overcome challenges and accelerate the adoption of AI right across the industry, whether that’s for customer service, risk modelling or even claims management and decisioning.”
He added: “The claims process in particular is a notoriously tricky area for AI. Claims decisions need to be consistent, predictable, transparent and auditable, which makes them unsuitable for the subjective and opaque nature of AI tools that are based on probabilities.
“This is where an insurance-specific framework can make a real difference. The industry needs to utilise rules-based decisioning systems configured by insurers, that adhere to their specific policies and compliance requirements.
“This will allow them to create systems that are enhanced by AI but ultimately leave the final judgement to be made by a human.”
The research found the industry remains “agnostic” on which specific area is the most ripe for AI disruption, with 45 per cent of respondents already using or exploring AI for customer service and chatbots.
Meanwhile, 43 per cent said they were using AI for risk modelling and data analytics, 41 per cent for claims management, 40 per cent for underwriting and pricing, 40 per cent for fraud detection, and 38 per cent for marketing.
EIP director of product, David Mitchell-Dawson, added: “It is important to remember that bias is an issue for insurers regardless of whether they are using AI or not. It has always been a challenge for the industry.
“A rules-based engine addresses this because it is not subject to any inherent biases.
“We are pleased to see that the industry is overall bullish on the power of AI, considering insurance is not known for being particularly speedy to enact change.”
tom.dunstan@ft.com
What’s your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
