New report examines dark side of AI
A new report from Allianz Global Corporate and Speciality (AGCS) has concluded that while AI-based technologies will bring in benefits for insurers, they will also create new loss and liability scenarios.
Technologies such as chatbots, autonomous vehicles and connected machines are becoming more common in everyday life for many people. Allianz’s report The Rise of Artificial Intelligence: Future Outlook and Emerging Risks points out that while AI brings many advantages for businesses – increased efficiency, fewer repetitive tasks, better customer experience – it could leave companies open to cyberattacks or technical failures that would cause large disruptions, leading to ‘extraordinary financial losses’. Michael Bruch, Head of Emerging Trends at AGCS, advised: “Active risk management strategies will be needed to maximise the net benefits of a full introduction of advanced AI applications into society.”
The report points out the two-sided nature of AI – with the technology possibly better detecting oncoming cyberattacks, while at the same time leaving a company more open to them. It is already estimated that a major global cyberattack has the potential to trigger losses in excess of $50 billion but even a half-day outage at a cloud service provider has the potential to generate losses of around $850 million, AGCS said.
In the report, AGCS identified five areas of concern: software accessibility, safety, accountability, liability and ethics. Insurers will have a crucial role to play in helping to minimise, manage and transfer emerging risks from AI applications, the report states. Insurance will need to develop to better address the damage that AI could cause, while AGCS predicts that new liability insurance models are likely to be adopted.
The positives for the adoption of AI within the insurance industry are still obvious, however. Bruch stated: “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.”