PriyaPatel
TLDR:
- Global financing for insurance technology (insurtech) firms rose 40% to $1.27 billion in the second quarter from the previous three months.
- AI-focused businesses are receiving a significant amount of funding, but there are concerns about the risks associated with artificial intelligence, such as deepfakes in fraudulent claims.
Global insurtech funding hit a peak in 2021 but has since cooled off, with companies still relying on AI to automate tasks and cut costs. However, there are fears about potential job losses and the limitations of delegating underwriting entirely to AI. AI-enabled risk assessments could lead to individualized pricing, benefiting some customers but leaving others uninsurable. The use of AI in creating deepfakes poses a risk for insurance fraud, but could potentially be used to detect them as well.
Full Article:
Global financing for insurance technology (insurtech) firms rose 40% to $1.27 billion in the second quarter from the previous three months, helped by money going into AI-focused businesses, reinsurance broker Gallagher Re said. The use of artificial intelligence in insurance presents challenges, however, because of the risks of so-called “deepfakes” in fraudulent claims and of the exclusion of potential customers by AI models, Gallagher Re said in a report.
Global insurtech funding reached a peak of $16 billion in 2021, but funding has cooled since then as valuations shrank. Companies are nonetheless betting on AI to help them automate tasks and cut costs, though there are fears it could lead to dramatic job losses. Around 33% of total insurance tech funding in the second quarter went into AI-focused insurtechs, according to the report from Gallagher Re, a unit of Arthur J Gallagher. AI was valuable in insurance pricing and underwriting, but “where underwriting has been entirely delegated to AI, success has been limited”, the report said. “It is becoming clearer that removing the human entirely is a mistake.”
AI-enabled risk assessments could drive a shift to individualised pricing, which could benefit some customers but leave others uninsurable, the report said. The use of AI to create deepfakes, or convincing images and videos, could be used in insurance fraud, the report added. “Any ability to obscure the truth and make it look very, very real is a problem,” Andrew Johnston, global head of insurtech at Gallagher Re, told Reuters. However, AI is useful in analysing large volumes of data and speeding up administrative tasks, the report said. AI could also find a way to solve its own problems, for instance in detecting deepfakes.
