With hands in a variety of insurtech functions, Ambac thinks about how to leverage AI

From a technology standpoint, one is data, always. In our role as either the owner of a fronting carrier managing programs and retaining part of the risk, or certainly as the acquirer of MGAs, pulling in data is critical for us because, at the end of the day, our value proposition to our subsidiaries includes bringing them advanced technology that they might not have access to on their own, giving them operational efficiency through back-office optimization, and then also being able to bring data intelligence to these companies.

One of our core philosophies is to produce top-quartile underwriting results. To do that, you need data, and you need to be able to provide back insights. We think that the principals of our companies have all proven themselves to be very successful in their own right. They could only be aided by having data intelligence to help with their natural ability to underwrite and price insurance.

One of the greatest opportunities we have is also one of the greatest risks – AI. Every company should be using AI. If you're not – and doing it ethically and safely, and with the right controls in place -- you're really far behind. However, if you don't have the right controls in place, and you don't have the right education in place, the AI is up for interpretation. It could lead you down the wrong path, to making the wrong decision. If someone's not doing research, if they're not owning that output that AI produces, they risk following the wrong path.

You need programs that actually bring AI out. Last March, companies would have said, "We're closing down AI. No one can use ChatGPT." Then, in the second half of the year, companies were more bullish, saying, "You've got to be using it." In reality, all they're doing is giving people the right to go out and play with ChatGPT on their own. 

Microsoft Copilot and ChatGPT get a lot of press. Copilot is really the top, and is going to be the top, simply because it's integrated into all the products you naturally use, whether it's Word or Excel. This is where a lot of underwriting data comes from, if not your own platforms, which in a lot of cases are built on Microsoft stacks. So those plays are going to be very prevalent and very important to the underwriter making decisions.

To the extent that you are able to get people using AI materially and in ways that enter the business decisioning process and/or the business document authoring process, then you need to also educate them on how to confirm they are not encountering a hallucination or, worse, taking a valid position albeit one that counters their own or the company's philosophies or positions.

Said another way, the user has to own the output, which means following through to the source of information to the extent they can get to it. Copilot and Gemini (ex-Bard), for example, show you links that you can follow to where the supporting information was sourced from. You can then decide if you trust this source and are willing to accept the writings or guidance from the AI. This is not a welcome concept, given just how easy it is to copy/paste the output from an AI, but the minor impact to efficiency, which is still net positive if you did all the research yourself, will pay dividends in the final AI-supported artifact or decision.