How insurers are dealing with the growing impact of AI

October 31, 2023 9:59 AM

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From actuaries considering the pros and cons of applying artificial intelligence to their statistical models to insurtechs launching an ethical AI consortium to establish guidelines for the fair and transparent use of AI in underwriting, claims processing and pricing, the increasing importance and influence of AI is top of mind for insurance carriers.

Read our roundup for more on these and other stories on how AI is changing the industry.

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AI tech necessitates rethink for actuaries old and new

"Seasoned actuaries, like me, built our careers before AI was widespread," says Hezhong Ma of Reinsurance Group of America, who also chairs the Society of Actuaries Research Institute's Actuarial Innovation and Technology Strategic Research Committee.

But the emergence of AI and its potential impact on the insurance industry means that a change in mindset may be needed for both experienced and young professionals in the business.

In interviews with Digital Insurance, Ma and two other actuaries, Michael Hoyer of global actuarial consulting firm Milliman IntelliScript and Blake Hill of data analytics company Dacadoo, discussed their perspectives on the pros and cons of using AI in their field.

Read more:

Actuaries ponder using AI in their work, but worry about the risks

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New ethical AI consortium aims to accelerate not control the use of AI

The need to prevent algorithmic bias when AI is used for underwriting, claims processing and pricing is one of the key drivers behind the recently launched Ethical AI in Insurance Consortium.

"We each believe that our unique focus, background and perspectives can add value to carriers and brokers that are racing to leverage the advancements in AI," said Abby Hosseini, chief digital officer of Exavalu, one of the consortium's founding insurtech members.

The consortium hopes that establishing a code of ethics with guidelines on how to utilize AI with fairness and transparency and without bias will foster greater trust between consumers and insurance carriers.

Read more:

Insurtechs launch Ethical AI in Insurance Consortium

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NAIC issues bulletin for insurers on how to use AI

New guidelines from the National Association of Insurance Commissioners are set to provide a framework for the use of artificial intelligence, the "latest and greatest tool" to emerge with the potential to transform the industry.

"There are a lot of issues out there, this is an important step toward helping people to get their arms around AI," said Cameron Kerry of The Brookings Institution.

However, while the guidelines recognize AI's ability to "improve consumer interface and service, simplify and automate processes, and promote efficiency and accuracy," questions remain about the document's handling of AI's "unique risks," such as disparate impact, which it fails to address.

Read more:

Insurance commissioners have posted AI guidelines. Do they go far enough?

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Insurtechs forge ahead with generative AI over more established insurers

Generative AI may be all the rage since the launch of ChatGPT, but there's still a long way to go before it becomes commonplace among the more well-established carriers.

"In the insurance industry, nothing moves quickly," said Michael Nadel of global strategy consulting firm Simon-Kucher. "So, in terms of where it's going to land in the insurance ecosystem, I think there's still so much whitespace."

In the meantime, young insurtechs are pressing ahead with their GPT initiatives, with recent releases such as InsureGPT from Roots Automation and MooGpt from Cowbell Insurance.

Read more:

Traditional carriers remain cautious about generative AI, while insurtechs adopt it

ST. PAUL, MN/USA - MAY 7, 2017: The Hartford Insurance Company Sign and Logo. The Hartford Financial Services Group, Inc. is a United States-based investment and insurance company.

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The Hartford steps forward tentatively on AI roadmap

"We see the potential, we see the disruption capabilities that this will provide, and we're working to make sure it's safe and it's secure in an enterprise environment," says Deepa Soni, chief information officer at The Hartford, describing her perspective on ChatGTP.

In the meantime, the company has banned the use of ChatGPT by its employees, while it explores developing its own large language model.

Digital Insurance spoke with Soni about banning generative AI, moving more towards the cloud and tackling other items on her tech to-do list.

Read more:

Hartford's Deepa Soni says no to ChatGPT, yes to advanced AI and cloud