PriyaPatel
TLDR:
- Insurers and insurtechs are grappling with the ethics and regulations surrounding the use of AI in their businesses.
- The U.S. and Europe have adopted models and frameworks for AI use in insurance, with a focus on transparency, traceability, and risk management.
Insurers and insurtechs are facing challenges in navigating the ethics and regulations surrounding the use of artificial intelligence (AI) in the insurance industry. In the U.S., the National Association of Insurance Commissioners (NAIC) has adopted a model for AI use, with 17 states implementing it and four using their own guidelines. In July, the European Parliament passed the AI Act, setting a legal framework for AI usage.
Transparency and traceability are crucial considerations when using AI, according to Jennifer Kyung, VP of property and casualty underwriting at USAA. USAA has implemented model risk management to ensure ethical AI use. Matthew McHatten, president and CEO of MMG Insurance, highlights the importance of data management and transparency in AI applications.
AI has the potential to reduce friction in transactions, improve customer experience, and enhance data processes for insurers. Munich Re approaches AI with a holistic approach, considering both quantitative and qualitative aspects to ensure fairness and effectiveness. Regulators will monitor insurers’ use of AI systems to control for potential bias.
Moving forward, insurers must consider the reputational risks associated with AI, guide consumer and regulatory expectations, and leverage data to provide competitive and affordable insurance products. Overall, AI regulation in insurance is a significant issue that impacts insurers worldwide.
