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The rise of generative artificial intelligence (AI) technologies and its emerging legislation raises a number of opportunities for insurance and legal professionals. With the insurance sector already moving towards automation, the integration of AI technology stands to accelerate that shift even more. From underwriting processes to claim management and fraud detection, AI’s impact is pervasive. These new tools signal a shift in how insurance executives and legal professionals make decisions and plan for the future.
Understanding AI Capabilities
For insurance professionals, AI has the ability to transform all facets of underwriting, from risk assessment methodologies to policy pricing and more. According to Data Bridge Market Research, AI in the insurance market size is expected to be valued at USD 6.92 billion by 2028.
However, understanding how AI makes decisions is important for insurers to understand. These advanced systems use vast amounts of data to make complex decisions, often with processing ability beyond human capabilities. Being able to differentiate between AI’s various techniques, such as machine learning and deep learning, can give insurers context into decisions they make about policies. In particular, generative AI, which can create new data models, has the potential to disrupt traditional insurance underwriting practices and create new areas of legal complexity. Insurers need to also recognize the ethical implications of some of this technology and keep a close pulse check on any AI legislation that might require increased reporting.
Navigating AI Legislation
To successfully advise clients and shape future strategies, insurance professionals need to stay aware of emerging AI legislation. For example, the AI in Government Act in the U.K. emphasizes responsible AI use within government agencies. In the U.S., congress has also been expressing interest around possible future regulations around this technology. The goal of these regulations is to ensure that AI systems are safe, transparent, and accountable.
If replicated in the insurance industry, we could see a similar demand for industry-specific AI advisory boards. This underscores the need for insurance professionals to be proactive in understanding the legal framework around AI, and what might be required from a reporting or regulatory perspective.
It’s important to note that although ChatGPT has made AI more commonplace, generative AI is just the most recent development in a broad array of data-science driven applications. Take the InsurTech industry, for instance: over the past decade, it’s seen significant transformation due to data solutions that have automated operations, digitized risk assessment, increased throughput, and ultimately, enhanced customer experience. Organization leaders should view the introduction of these AI tools as a time of opportunity, growth and a chance to introduce new capabilities to the business.
Looking Ahead: How Can C-Suite Executives Prepare?
The key to staying ahead of the curve is fostering a culture of learning and adaptation in your organization. By actively staying engaged in AI and legislation discussions, executives can ensure they stay abreast of changes. By understanding AI’s capabilities, keeping an eye on rapidly shifting legislation and preparing for algorithmic auditing, insurance professionals are better equipped to navigate the changing landscape, leverage new opportunities and mitigate risk.
The emergence of generative AI and its accompanying legislation is not a threat, but an opportunity to innovate and provide better services to customers. By honing a thoughtful and proactive stance around the technology, insurance professionals can lead the way in integrating AI in a way that is ethically sound, legally compliant, and beneficial for all stakeholders. Staying ahead of this technology will not only benefit your own organization, but will also shape the future of the insurance industry as a whole.