AI Can Do That Now

Abstract

AI and the insurance industry have a reciprocal relationship characterized by AI transforming processes of insurers, intermediaries, and insurtechs, and by insurance shaping the development and deployment of AI. Insurance industry stakeholders can use AI—as is the case in other sectors—in every stage of the insurance value chain, from product development and underwriting through marketing, sales and claims handling to loss prevention. Like any other AI operator, companies in the insurance sector must overcome certain practical, legal and ethical challenges in order to use AI in a way that is both useful and legally compliant. The main challenges are data preparation, regulatory frameworks such as data privacy legislation, and potential losses of human expertise. In response to this transformation, insurance as a legal product has a significant influence on the identification, prevention, and mitigation of risks arising or being shaped through the use of AI in society. By transferring risk through insurance, the insurance industry enables private and professional stakeholders to take on AI risks, thereby stimulating innovation. At the same time, the risk dialogue taking place prior to the conclusion of insurance contracts, together with the obligations set out in the insurance policy, can prevent inappropriate AI risks from arising in the first place. Insurers are faced with the task of assessing which AI risks are already covered by existing policies without this being reflected in the premiums (Silent AI), and whether new insurance products need to be developed.