You’ve likely heard of a little thing called artificial intelligence, and if you haven’t, I admire your refusal to be dragged kicking and screaming into the 21st Century. It’s a frightening place after all.

The insurance industry is in the midst of a digital transformation, with AI being employed in areas as diverse as underwriting and claims, customer service chatbots and risk assessments. AI can expedite processes and, generally speaking, is helping refresh a historically ‘traditional’ sector. But are there any drawbacks?

Advisory body the Centre for Data Ethics and Innovation (CDEI) has published the first series of three papers on ethical issues in AI. These so-called snapshots are briefing papers designed to build understanding on ethical and governance issues related to the development and deployment of AI. In a snapshot paper on AI and personal insurance, the CDEI covers how AI might change insurance, how many insurers are using the technology, the ethical implications of insurers using AI, how the industry can use the technology responsibly, and what’s in store for the industry.

The profession needs to involve the wider public in the debate about how insurers should be able to nudge policyholders using AI

The paper refers to the Chartered Insurance Institute (CII)’s Digital Companion to their Code of Ethics, which offers industry practitioners clearer guidance on how to responsibly deploy AI and data. The CII, which is the industry’s professional body, has shared its own stance on AI and data ethics, saying that it agrees with the CDEI that the profession must engage with the public to reach a consensus on what constitutes a responsible use of AI and data, e.g. when it would be acceptable to process social media information, or utilise an algorithm to predict how willing people would be to pay a higher premium. Society should, says the CDEI, have a say in where the boundary between acceptable and unacceptable discrimination lies; an assessment with which the CII agrees.

“The report rightly identifies common ground on what constitutes an ethical use of AI and we are pleased the authors state the CII’s Digital Companion to their Code of Ethics is a step in the right direction,” said Keith Richards, Managing Director at the CII. “We agree the profession needs to involve the wider public in the debate about how insurers should be able to nudge policyholders using AI, and when it might be unacceptable for insurers to use AI to infer characteristics about their customers.”