In a new report, Allianz Global Corporate & Specialty (AGCS), a division of global insurer Allianz, has claimed that the advantages offered by increasingly integrated Artificial Intelligence (AI) applications in the re/insurance industry may be outweighed by the potential threats they bring.
AGCS claims that increased vulnerability to malicious cyber-attacks and technical failure, as well as the potential for larger-scale disruptions and extraordinary financial losses, pose significant risks to re/insurers as AI becomes more widely adopted in the industry, and as societies and economies become more interconnected.
Additionally, insurers and reinsurers will have to contend with new liability scenarios as decision-making responsibilities shift from humans to machines and manufacturers.
However, AGCS still maintains that the growing reliance on AI applications like chatbots, autonomous vehicles, and connected machines in digital factories offers many advantages for re/insurers in terms of increased efficiencies, fewer repetitive tasks, and better customer experiences.
“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,” said Michael Bruch, Head of Emerging Trends at AGCS.
Re/insurers have become early adopters of AI technology due to their reliance on large quantities of data and repetitive processes, which can be efficiently analysed by machine learning applications to increase customer awareness, reduce risks, and develop new solutions.
AGCS also suggests that AI could potentially transform the way re/insurers interact with customers, enabling 24/7 service, more appropriately targeting customer needs, and delivering value on time and at lower cost.
AGCS’s analysis follows a recent report by SCOR, in which Chairman and Chief Executive Officer (CEO) Denis Kessler claimed that AI may be a game changer for the re/insurance industry.
AI, which is also often referred to as machine learning, is software that can effectively think and learn with the same logical capacity as a human.
