Insurers' Use of Artificial Intelligence: Opportunities and Challenges

Like most financial services industries, insurance companies and regulators have in recent years increasingly utilized algorithms, machine learning and artificial intelligence in their day-to-day operations. Indeed, a 2019 study showed that more than half of property/casualty insurers and nearly forty percent of life carriers had adopted predictive analytics programs that were integrated with the companies' core systems, while another forty percent of life insurers had plans to develop such programs. Some carriers use machine learning techniques to analyze a wider array of information about their insureds and prospective insureds, including social media posts, online reviews and government filings. With these AI-assisted risk assessments, insurers may be more able to customize insurance policies to better meet an insured's needs and/or improve the insurers' ability to assess the risk of a particular applicant. Insurance companies have also begun using algorithms to detect patterns of fraudulent behavior that cannot be detected by devices such as wearable technologies alone.