Cross Sector Issues
The double-edged sword of AI – are you ‘ready, willing and able’?
The potential of InsurTech has been well rehearsed but it is a double-edged sword. While artificial intelligence (AI) may promise operational efficiency and gender equality, one problem is that the computers are learning from us. To the extent that their codes derive from human text, where stereotypes and generalisations abound, they will take on our conscious and unconscious bias.
AI may be streamlining our processes but it is perhaps not a coincidence that we are at the same time seeing a rise in mental health issues in the workplace as traditional roles are threatened. This is an issue for all employers and we need to consider carefully the extent to which it is our responsibility to support retraining and upskilling.
This is then an opportune time for the House of Lords’ report, AI in the UK: ready, willing and able?, to stress that ethics should take centre stage and to recommend a cross-sector AI code promoting principles of fairness and education to enable individuals to flourish mentally, emotionally and economically alongside AI.
Climate change pressure will offer insurers new green opportunities
Insurers will face increasing regulatory and political pressure about climate change following the final report of the European Commission’s High-Level Expert Group on Sustainable Finance which was delivered earlier this year.
Across the globe natural catastrophes are increasing in frequency and scale and their impact on the insurance market has been dramatic. Many of the major losses are closely related to climate change and are set to continue to worsen. Insurers have a real opportunity to display their green credentials by carefully considering who to insure and by reinstating properties in an environmentally friendly way. In addition to handling claims, climate change impacts insurers both as investors and as employers with their own substantial carbon footprint. Our thought leadership piece on natural disasters looks in more detail at how the insurance market could respond.
Five ways to cut insurance claims costs this year
As we watch the rise in claims costs globally, there are a number of weapons in our armoury to reduce either the number of claims themselves or the cost of the claims process. As highlighted in last year’s report, InsurTech offers numerous important developments including blockchain, drones, the Internet of Things and data analytics, driving improved performance through a better understanding of the data and trends.
Secondly, we must continue to work closely with the Government and judiciary, as evidenced in the Civil Liability Bill and earlier Jackson reforms, to ensure that these black-letter developments take into account the widest implications for the industry. We must also work together with insureds to encourage better risk management of their own affairs, for example encouraging supply chain management and supporting subrogated recoveries.
Alternative dispute resolution is also becoming more popular and we are following keenly the extension of the Financial Ombudsman’s remit. Finally, knowledge management itself, exemplified in this report, is not just a buzzword for law firms but for all businesses in order to understand the bigger picture and the optimum way to resolve claims.