Uncertainty reigns for insurers as industry adopts AI standards

Edin Imsirovic, an associate director at insurance rating firm AM Best, said the NAIC’s artificial intelligence principles are “exactly what the industry needs.” The fact that companies are gaining access to more data through AI doesn’t mean their algorithms are acting fairly — or, as Imsirovic said, “Garbage in, garbage out.”

He said companies are finding artificial intelligence, including machine learning, effective in areas such as fraud detection, customer service and claims processing, but not useful in others. Machine learning is the process by which an AI improves its performance through trial and error rather than specific programming.

“The takeaway, I would say, is that we haven’t really seen anything yet compared to what’s to come in coming decades, as we move towards more sophisticated” technology, Imsirovic said.

A new use is “computer vision” for claims handling, in which AI identifies objects, such as drones detecting roof damage after a storm instead of people risking injury to take photos.

Despite these growing uses, it’s difficult to quantify the extent to which machine learning is used in insurance, Imsirovic said. Therefore, the burden of implementing principles to govern it is unclear.