Insurers are leveraging the potential of AI themselves to remain competitive, improve processes and increase efficiency, says a new report from Lloyd’s
As the world becomes increasingly automated, forcing underwriters to adapt and navigate a new risk environment, insurers are leveraging the potential of AI themselves to remain competitive, improve processes and increase efficiency.
This is according to two new reports from Lloyd’s exploring these trends in more detail.
“Taking control: artificial intelligence and insurance”, published in collaboration with The University of Surrey, analysed the associated risks of AI implementation as well as the potential for AI to help insurers improve their operations.
The report identifies four risks areas for AI: trust and transparency, ethics, security and safety. As artificial intelligence systems become more complex, cyber breaches are likely to have an even greater impact, according to the report. Meanwhile, ambiguity and legal uncertainty is contributing to unanswered questions around who is ultimately liable when something does go wrong.
But AI also provides business opportunities for insurers, as any company offering algorithm-based systems to data-rich companies might seek to insure against the risk of the algorithms returning incorrect decisions. Moreover, new companies are emerging in the disinformation defence area to provide technology to filter out fake news; detect and eliminate troll-bots; and certify information and authenticity of images and videos. Finally, insurers could explore what type of products could be useful to these new businesses and in what form.
As well as being aware of the risks associated with using this fast-developing technology, insurers should look to exploit the potential benefits that AI and robotics can offer in terms of improving their current processes and delivering better value.
Building on this, “Taking control: robots and risk”, investigates the impact “collaborative robots” (or cobots) on the economy, and the subsequent risks implications for the insurance industry.
In the future millions of jobs could be taken over by increasingly sophisticated robots, according to various predictions. This has the potential to significantly change the risk landscape in many parts of the economy, including: manufacturing, agriculture, healthcare and retail. The adoption of cobots in factories, for example, could result in new risks to human co-workers, cyber-attacks and faults resulting in large business interruption and property losses, and potential leaks of intellectual property. However, there is an opportunity for insurers to collaborate with clients as data from cobots will provide a much greater understanding of risk and offers opportunities for improved risks and pricing models. The report finds that adoption could be speeded up by insurance as it could help to address health and safety concerns.
Dr Trevor Maynard, Head of Innovation for Lloyd’s, said:
“Our world is becoming increasingly automated. Insurers have an opportunity to play a role in shaping the development of the AI and robotics and will no doubt be instrumental in providing solutions to some of the most complex risks associated with these technologies. Some of these risks have been well documented, however for insurers to respond appropriately, it is important that the benefits and opportunities of AI and robotics are properly understood. The publication of these two reports today aims to provide underwriters with guidance on best practice as well as insights into the short, medium and long-term potential of AI and robotics.”
Attila Emecz, Director of Research Strategy, University of Surrey said:
“Over the last few years there has been a revolution in the development of AI and robotics yet we are only just beginning to tap into the vast potential of such technologies. We have been delighted at the University of Surrey to be able to work with Lloyd’s and the University of Exeter in producing the reports we are launching today. We are confident that these reports will help the insurance sector in developing new business models and ways of working that will deliver significant social and economic benefit to society.”
Learn more and download these new Lloyd’s Emerging Risk Reports here.