Insurers instrumental to progress in AI and robotics

While artificial intelligence provides underwriters with the opportunity to improve processes, increase efficiency and remain competitive, it also presents them with the challenge of navigating a completely new risk environment in terms of servicing clients. This dual challenge was the impetus behind two pieces of research conducted by the University of Surrey and Lloyd’s of London to explore these trends in more detail.

The research identifies four risks areas for AI: trust, ethics, security and safety. It stands to reason that, 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 is contributing to unanswered questions around who is ultimately liable when something does go wrong. 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 defence area to provide technology to filter out fake news; detect and eliminate troll-bots; and certify information and authenticity of images and videos. Insurers could explore what type of products could be useful to these new businesses and in what form. Looking at these issues in more detail, the first study ‘Taking control: Artificial intelligence and insurance’ analyses the associated risks of AI implementation as well as the potential for AI to help insurers improve their operations.

In the future millions of jobs could be carried out 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 ‘collaborative robots’, or cobots, in factories, for example, could result in new risks to human co-workers, cyber attacks and faults resulting in large business interruption and property losses, and potential leaks of intellectual property. However, there is an opportunity for insurers to collaborate with clients as data from cobots will provide a much greater understanding of risk and offers opportunities for improved risks and pricing models. Adoption could even be hastened by insurance as it could help to address health and safety concerns. Building on this, the second piece of work, ‘Taking control: Robots and risk’ investigates the impact of cobots on the economy, and the subsequent risks implications for the insurance industry.

Head of Innovation at Lloyd's, Dr Trevor Maynard says as the world becomes increasingly automated, insurers have an opportunity to play a role in shaping the development of AI and robotics. “[Insurers] will no doubt be instrumental in providing solutions to some of the most complex risks associated with these technologies. 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.”

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