The use of generative artificial intelligence by insurers and their customers is growing exponentially as more companies make use of the increasingly accessible technology.
The benefits for businesses will be undoubtedly vast as production processes are streamlined, accuracy becomes pinpointed, and creativity is enhanced. Insurers and brokers, too, will see gains from AI as they use it to improve claims handling, underwriting and placement services.
But as the technology is implemented, the nature of the risks being insured will also likely be transformed, whether it be through the emergence of new exposures or because of the intensification of existing risks.
As we report in this month’s cover story, insurers, brokers and legal experts are mulling both the potential upsides and downsides that AI could bring. On the one hand, the technology might lead to enhanced safety, but the threat of bias being ingrained in an AI application could lead to far bigger losses when something goes wrong.
And, given the huge amount of data that AI processes rely on, cyber liability and privacy risks will be amplified as use of the technology expands.
Numerous other potential risks will almost certainly emerge that risk managers and insurers will need to react to.
Reassuringly, insurers so far appear to be responding with a measured approach to the advance of AI and are waiting to see how claims data plays out rather than imposing exclusions based on speculative concerns. Such a response makes sense given that we are only at the beginning of what is likely to be the transformative implementation of AI and even more powerful technology, such as quantum computing, is in the process of development.
As advances are made, risk managers must remain attuned to developments in their organizations and ensure that their risk management processes incorporate the changes that are taking place and that appropriate safety and security measures are implemented. By inserting themselves into the AI conversation, risk managers can go a long way to protecting corporations from the potential pitfalls that they will face in the race to take advantage of the technology.
Ultimately, the successful management of the risks inherent in the adoption of AI will depend on a successful balance of embracing innovation and preventing inadvertent or deliberate misuse.
By approaching AI adoption with foresight, diligence and a commitment to ethical principles, insurers and risk managers can help unleash its potential while safeguarding against its inherent vulnerabilities. By doing so, they can establish a more resilient and equitable insurance sector that will fulfill its traditional role of supporting the economy and being positioned to help it recover when things inevitably go awry.
