AI in Insurance: Transforming Risk Management and Building Resilient Communities

New Products, More Resilience

At the 2019 I.I.I. Joint Industry Forum, a panel on artificial intelligence (AI) and insurance discussed how AI can be used to build resilient communities and help the insurance industry better address risk. Ahmad Wani, CEO and co-founder of One Concern, highlighted how AI is being used to analyze data on a hyperlocal level to predict the impact of various hazards. His company partners with local governments and insurance companies to plan for future losses proactively. "We don't need to wait for disasters to happen to prioritize the response; we need to make changes and act now before the disaster," Wani said.

Transparency and Fairness are Top of Mind

Sean Ringsted, executive vice president, chief digital officer, and chief risk officer at the Chubb Group, noted that insurers are expanding their product offerings thanks to AI and big data. For example, contingent business interruption insurance can now be effectively analyzed and priced based on supply chain risks. However, Ringsted also pointed out that "it's not all good news and roses." Kyle Schmitt, managing director of the global insurance practice at J.D. Power, cited consumer concerns about the data and algorithms used for AI-enabled products, particularly regarding security, privacy, and fairness.

Ensuring Ethical Use of AI

James Roche, vice president of personal lines product development at ISO, emphasized the importance of robust data stewardship and strict control over AI outputs to ensure fair and ethical outcomes. Schmitt noted that consumers are open-minded but want ground rules for the ethical use of AI. According to a recent survey by PwC, 72% of consumers believe that AI will significantly impact the insurance industry, but 64% are concerned about data privacy. To leverage AI effectively, insurers must address these concerns and ensure transparency and fairness in their AI-driven products.

In conclusion, while AI offers significant opportunities for the insurance industry to innovate and build resilient communities, it also presents challenges related to transparency, fairness, and ethical use. Insurers must prioritize these issues to build trust with consumers and regulators. For readers, it's essential to stay informed about how AI is being used in the insurance industry and advocate for transparency and ethical practices.