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Implications of Artificial Intelligence and Robots for Insurers

Robot hand holding globe in palm with computer screen in background
May 28, 2019

According to two recent Lloyd's reports1, as the world becomes increasingly automated, forcing underwriters to adapt and navigate a new risk environment, insurers are leveraging the potential of artificial intelligence (AI) to remain competitive, improve processes, and increase efficiency.

Taking control: artificial intelligence and insurance analyzes 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 are contributing to unanswered questions around who is ultimately liable when something does go wrong.

According to the report, 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 defense 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, the report said 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 of "collaborative robots" (cobots) on the economy and the subsequent risk implications for the insurance industry.

According to the report, 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 coworkers, cyber attacks and faults resulting in large business interruption and property losses, and potential leaks of intellectual property.

However, the report said there is an opportunity for insurers to collaborate with clients as data from cobots will provide a much greater understanding of risk and offer opportunities for improved risks and pricing models. The report finds that adoption could be sped 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."

He continued, "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."


  1. Published in collaboration with The University of Surrey
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