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The use of artificial intelligence in insurance presents
challenges, however, because of the risks of so-called "deepfakes"
in fraudulent claims and of the exclusion of potential customers
by AI models, Gallagher Re said in a report.
Global insurtech funding reached a peak of $16 billion in 2021,
but funding has cooled since then as valuations shrank.
Companies are nonetheless betting on AI to help them automate
tasks and cut costs, though there are fears it could lead to
dramatic job losses.
Around 33% of total insurance tech funding in the second quarter
went into AI-focused insurtechs, according to the report from
Gallagher Re, a unit of Arthur J Gallagher. AI was valuable in
insurance pricing and underwriting, but "where underwriting has
been entirely delegated to AI, success has been limited", the
report said.
"It is becoming clearer that removing the human entirely is a
mistake."
AI-enabled risk assessments could drive a shift to
individualized pricing, which could benefit some customers but
leave others uninsurable, the report said.
The use of AI to create deepfakes, or convincing images and
videos, could be used in insurance fraud, the report added.
"Any ability to obscure the truth and make it look very, very
real is a problem," Andrew Johnston, global head of insurtech at
Gallagher Re, told Reuters.
However, AI is useful in analysing large volumes of data and
speeding up administrative tasks, the report said. AI could also
find a way to solve its own problems, for instance in detecting
deepfakes.
(Reporting by Carolyn Cohn; Editing by David Holmes)
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