Artificial intelligence can address some of the most pressing issues facing the insurance sector, but safeguards must be in place, according to the Insurance Council of Australia.

In a joint report with CSIRO that aims to provide an AI reference point for insurers, regulators, policymakers and consumers, ICA CEO Andrew Hall says the technology requires “careful, responsible stewardship”.

“We must take a consumer-centric, values-led approach to the development and deployment of AI, ensuring the benefits of innovation are delivered fairly, safely and transparently,” he said.

AI is already used in underwriting and pricing, claims triage, fraud detection and customer service automation.

But Mr Hall says without the proper governance, it could create data privacy concerns, cybersecurity vulnerabilities, unintended biases in decision-making and limited transparency – eroding trust and creating “unintended complexity”.  

ICA recommends robust testing, governance and human oversight as AI is rolled out in the industry to ensure it “enhances, not compromises, consumer outcomes”.

“The opportunities are significant,” it said. “AI can support more tailored products, faster and enhanced claims experiences, advanced risk management, and smarter, data-informed decision-making across the entire insurance value chain.

“It also has the potential to help the industry better understand and respond to complex and emerging risks – from climate change to cyber threats.”

CSIRO says AI could make insurance “more affordable, responsive and accessible” and priority use cases for Australian insurers are automated claims processing, fraud detection, enhanced underwriting, natural disaster impact prediction, and operational compliance.

“The industry is committed to prioritising safe adoption by addressing privacy and safety concerns and AI system biases so these technologies serve all Australians fairly,” Mr Hall said.  

See the report here.