Every information source comes with a bias, or set of assumptions. But when it’s AI making decisions on a person’s risk as a driver, home owner, or traveller, things could get tricky. Patterns within one age group don’t mean every person that age is also high/low risk. The great opportunity of AI and automated systems is sifting granular level detail, within seconds. That’s what can make the real difference in premiums, or claims settlement speeds.
New research published by leading embedded insurance provider EIP reveals that UK and European senior insurance professionals are concerned about bias or unfair outcomes in AI-driven processes, but remain bullish on the impact of AI overall.
Here are the findings;
The research, which involved a survey of 250 senior insurance professionals across the UK and Europe, found that 87% of professionals are concerned about bias. Yet, 90% of respondents expect their claims administration to be managed end-to-end by AI within the next 24 months.
Other key concerns include data security and privacy (23%), regulatory non-compliance (21%), system reliability and errors (21%) and job displacement or staff resistance (20%). For larger firms, regulatory concerns are front of mind at 33%.
Overall, the industry feels least comfortable automating claims submissions (40%), followed by underwriting recommendations (39%) and customer interactions (35%).
Looking ahead, the industry transparent algorithms and decision logs (39%) could help to quell concerns around the use of AI in insurance. This signals the need for industry specific AI capabilities that are built with an understanding of regulatory requirements including control, transparency and auditability.
Overall, 100% of respondents are confident that AI will have a sizeable impact on the insurance industry, with 58% expecting it to drive major efficiency gains and 33% anticipating that AI will transform the industry entirely.
The industry remains agnostic on which specific area is the most ripe for AI disruption with almost half (45%) of respondents already using or exploring AI for customer service and chatbots, 43% for risk modelling and data analytics, 41% for claims management, 40% for underwriting and pricing, 40% for fraud detection, and 38% for marketing.
Other key findings include:
- Human oversight critical: 99% of insurance professionals surveyed believe that there should be some level of human oversight to accompany AI-driven outcomes.
- Ease of integration a top priority: 27% of the industry say that simple integration is the most important thing when considering an AI tool, followed by partnership and support (27%).
- Cost is not a concern: Just 10% of insurance professionals said that cost and ROI would strongly influence their decision when assessing an AI solution.
Ross Sinclair, Founder and CEO of EIP, commented: “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.
“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.”
David Mitchell-Dawson, Director of Product at EIP, said: “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. This attitude has been mirrored by regulators too, who are moving fast to avoid missing out on this potentially multi-trillion-dollar industry.
“Insurers told us that they’re expecting their full end-to-end claims administration to be handled by AI within the next 15 months on average, so frankly if you’re not doing anything now, you’re already too late.”
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