DEMYSTIFYING AI IN INSURANCE UNDERWRITING AND PRICING
R&C: What are your predictions for the impact of rapidly evolving artificial intelligence (AI) on the insurance industry? Do you believe it will be constructive, destructive or both?
Hein: Rapidly evolving artificial intelligence (AI) is set to have a significant impact on the insurance industry. AI technologies have the potential to improve efficiency, reduce costs and enhance the customer experience. AI can be used in insurance underwriting to analyse vast amounts of data and assess risk more accurately, resulting, for example, in better pricing. However, the increasing use of AI could also disrupt the insurance industry by replacing certain job roles. Additionally, the accuracy and fairness of AI-based decision making may come under scrutiny, particularly in areas such as claims processing, where the use of AI could lead to a lack of empathy and human judgment. In summary, the impact of AI on the insurance industry will likely be both constructive and destructive. While it offers significant benefits, such as increased efficiency and improved customer experience, there may also be concerns about job displacement and ethical concerns surrounding the use of AI in decision making.
Senatore: While the adoption of AI models for pricing is still in its early stages and relatively rare, their use is often more instrumental than all-encompassing. These models help in tasks such as selecting the best variables or grouping variables. They assist with navigating the complexities, but it is still the user being responsible for the final decisions. This highlights the importance of a collaborative approach between AI models and human expertise in the ever-evolving insurance pricing landscape. AI models display varying levels of effectiveness depending on the specific circumstances.
Jul-Sep 2023 Issue
SAS