Using AI can conflict with insurers' sustainability goals, according to a
AI, especially Gen AI, requires "high-energy consuming supercomputer chips" that require more electricity, said Scott Shapiro, U.S. insurance sector leader at KPMG. "More energy consumption does lead to pressure on climate change, which increases weather exposure, which increases insurance premiums and economic cost to society, but it's then also enabling the very same tools that are going to help solve those problems."
The consulting firm asked 1,390 decision makers across global markets, including 183 from the insurance sector, about their use of AI, and their operational and revenue goals for the technology.
KPMG found that 72% of the insurance respondents struggle to balance the increased use of energy to power AI with their sustainability goals. Also, 75% see meeting sustainability objectives as more strategically important than implementing AI, and 79% have plans to mitigate the energy demands created by using AI.
"Our industry is unique in that we often deal with both sides of innovation," said Shapiro. "We deal with the opportunity it creates, as well as the risks and the challenges."
The demand for electricity is growing, by about 2.5% a year ago to 4% now, Shapiro noted. Data centers for computing are a big cause of this, he added. KPMG projects that data centers will grow 15% per year, and a growing middle class population worldwide also contributes to increased demand.
The impact of increased energy demand and consumption, with electricity, depends on how it is supplied. Using renewable energy sources can make it more sustainable, Shapiro observed.
Still, when insurance respondents were asked about goals they want to achieve using AI, just 23% said supporting sustainability and environmental goals, the lowest among 12 goals cited. Of those surveyed, 42% said operational efficiency and 40% said data management were their top goals for improvement using AI. Currently, insurers are using AI more to reduce their operations budgets, the report stated.
