ARTIFICIAL intelligence (AI) applications have a potential to improve value chain in the insurance industry as well as automate repetitive processes, boost risk analysis and improve customer interaction, a new report has revealed.
BY MTHANDAZO NYONI
AI, also referred to as machine learning, is essentially software that is able to think and learn like a human.
According to a new report titled The Rise of Artificial Intelligence: Future Outlook and Emerging Risks, prepared by insurer, Allianz Global Corporate and Specialty (AGCS), AI applications help businesses increase efficiencies, among other things.
“There is huge potential for AI to improve the insurance value chain. Initially, it will help automate insurance processes to enable better delivery to our customers. Policies can be issued, and claims processed, faster and more efficiently,” AGCS head of emerging trends, Michael Bruch, said.
“AI comes with potential benefits and risks in many areas: economic, political, mobility, healthcare, defence and the environment. Active risk management strategies will be needed to maximise the net benefits of a full introduction of advanced AI applications into society.”
By boosting data analytics, AI would also give insurers and their customers a much better understanding of their risks, so that they can be more effectively reduced, while new insurance solutions could also be developed, the report said.
For example, AGCS said AI-powered analytics could help companies better understand cyber risks and improve security.
At the same time, the technology could assist insurers in identifying accumulations of cyber exposure.
“AI will change the way insurers interact with their customers, enabling 24/7 service,” it said.
The report indicates that insurers will have a crucial role to play in helping to minimise, manage and transfer emerging risks from AI applications.
Traditional coverages, the report said, would need to be adapted to protect consumers and businesses alike.
“Insurance will need to better address certain exposures to businesses such as cyber-attacks, business interruption, product recall and reputational damage,” it said.
“New liability insurance models will likely be adopted — in areas such as autonomous driving for example — increasing the pressure on manufacturers and software vendors and decreasing the strict liability of consumers.”
However, the report notes that even though the widespread implementation of AI applications brings many advantages for businesses such as increased efficiencies, fewer repetitive tasks and better customer experiences, it has potential threats that could easily counterbalance the huge benefits.
It said vulnerability to malicious cyber-attacks or technical failure will increase, as will the potential for larger-scale disruptions and extraordinary financial losses as societies and economies become increasingly interconnected.
Companies will also face new liability scenarios as responsibility for decision-making shifts from human to machine and manufacturer, report said.
AGCS is the Allianz Group’s dedicated carrier for corporate and specialty insurance business.