The insurance industry has seen a
Respondents from carriers and agencies both agreed that there is value in using traditional AI and generative AI tools, but 73% found that it was too risky to deploy within their organizations.
Broken down by each individual group, that view was prevalent among 83% of carriers and 60% of agency professionals.
A further 68% held that it was too risky to insure clients that use AI in some capacity, which yielded a smaller disparity in views among carriers and agency experts at 71% and 66% agreeing respectively.
John Romano, principal with Baker Tilly's principal financial services risk advisory practice, said that securely implementing AI-powered tools in an insurance organization requires regular audits to continually monitor their transparency and explainability.
"Assessing transparency will determine what data is used to come to an answer, and assessing explainability will determine if AI tools can provide understandable and clear reasons behind decisions," Romano said.
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The rise in lawsuits against insurance providers over the last few years, while not centered around technology per se, highlights the
Lex Machina, a division of
Romano highlighted the importance of consistent communication between insurers and policyholders as part of managing customer relationships — especially in anticipation of an impending claims event.
"In today's insurance market, particularly with the increasing frequency and severity of natural disasters, consumers fear they won't receive the claims payouts they expect. … At the same time, regulators are focused on ensuring that insurers uphold their responsibility to policyholders, with concerns centered on both solvency and the fair treatment of consumers," Romano said.
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Read on to dive into some of the top lawsuits that have plagued insurers over the last few years and how they impacted firms and consumers alike.
