In the rush to deploy AI solutions across the insurance chain it is important to remember the FCA obligations on looking after vulnerable consumers, plus those who still don’t have internet access. Here’s the word from the CII;
A recent Chartered Insurance Institute (CII) roundtable report outlines the need for firms to have adequate vulnerability management data infrastructure, governance frameworks, and a supportive culture as the pre-requisite for effective implementation of AI customer vulnerability management.
The report explores the role of AI in identifying and supporting customers in vulnerable circumstances, highlighting the potential risks and rewards of its adoption in insurance and financial services. Primarily, it emphasises the need for responsible implementation to ensure AI solutions enhance customer outcomes.
At the roundtable, hosted in September, the Financial Conduct Authority (FCA) reaffirmed its principles-based, ‘tech-positive’ approach, stating that existing regulatory frameworks, including the Consumer Duty and vulnerability guidance, are sufficient to manage AI-related risks. The FCA does not intend to introduce prescriptive rules on AI at this time, and encourages safe and responsible innovation aligned with the five cross-economy ‘responsible AI’ principles suggested by the UK government.
Participants agreed that AI should augment rather than replace human judgment, and that firms must prioritise consumer outcomes over efficiency, undertake thorough vendor scrutiny, pilot test solutions, implement transparent decision-logging, and carry out outcome monitoring to prove AI delivers good outcomes for vulnerable customers.
Matthew Hill, CII Chief Exec, said: “AI can help both businesses and customers reduce the impact of vulnerability, but if it isn’t used properly, it could harm those most in need of additional support. The CII is working across the sector to help businesses make sense of these tensions, developing resources to ensure good customer outcomes can be achieved for all.”
The report calls for sector-wide collaboration to develop practical resources, such as adapting existing procurement checklists and ethical standards, and suggests exploring independent certification (kitemarks) to build trust in AI-enabled services.
Among the two dozen participants were the FCA, EFPA, and University of Oxford, along with AI ethicists, insurance and financial planning firms, and individuals with lived experience of vulnerability.
The full report, including practical guidance and resources, is available here.
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