GILC report reveals dual impact of AI on insurance industry

Global Insurance Law Connect (GILC) has unveiled its first report on the integration of artificial intelligence in the insurance sector, providing a comprehensive analysis of 18 countries.

The report reviews the transformative effects of AI, including improvements in efficiency and innovation in various insurance operations, while also highlighting associated challenges such as potential biases in insurance algorithms. AI, privacy concerns and an increased risk of cyber incidents.

The role of AI in changing the insurance landscape

Gillian Davidson, Chair of the GILC and Partner at Sparke Helmore Lawyers, highlighted the critical role of AI in revolutionizing the insurance landscape.

“AI has already become an essential part of our daily lives and is quickly making its way into the insurance industry. This trend is expected to continue as AI offers many benefits, including faster claims processing, improved underwriting, innovative insurance products, streamlined administrative processes and more efficient chatbots,” she said .

One of the report’s highlights is AI’s ability to quickly process and analyze large data sets, a capability that proves invaluable for forecasting and risk assessment.

Using AI to better understand risks

Davidson highlighted how AI’s analytical prowess can help insurers enter markets with complex risk profiles, particularly where historical data is scarce. This analytical advantage is instrumental in developing accurate coverage options, particularly in areas like cyber insurance.

“Ultimately, this improved risk analysis will benefit consumers because it will allow insurers to offer more relevant and tailored coverage to their customers,” she said.

AI regulations

The evolving regulatory landscape surrounding AI is another focus of the report, with the insurance industry keeping a close eye on developments such as the upcoming EU AI law, which is expected to serve as a regulatory blueprint for AI. global scale.

The industry is also acutely aware of the emerging responsibilities and risks that come with AI adoption, including privacy and cybersecurity issues.

Insurance distribution models

The report addresses digital transformation within insurance distribution models, a trend accelerated by the COVID-19 pandemic and characterized by a significant shift towards online and digital platforms. This development is expected to continue, benefiting markets where insurance penetration rates are traditionally low.

AI Challenges

The adoption of AI is not without its challenges when it comes to data privacy. The report draws attention to the need for insurers to establish robust compliance mechanisms with data protection standards in order to mitigate the risks associated with data breaches and effectively manage such incidents.

“Currently, insurance solutions adapted to risks linked to artificial intelligence are still in the early stages of development. However, as the technology advances and becomes more prevalent and regulators become more focused, we can expect to see an increase in AI-targeted risk solutions,” Davidson said.