Insurers are proceeding slowly and carefully with artificial intelligence adoption, according to Moody’s.

This caution contrasts with faster adoption in other financial services markets, the analyst says after surveying 600 risk and compliance professionals worldwide.

Moody’s found the financial services sector is using AI for:

• Fraud detection, monitoring transactions and identifying risk, so teams can detect anomalies, flag suspicious activity and strengthen fraud prevention.
• Screening and “know your customer”, for due diligence and faster and more accurate assessments.
• Automation of manual tasks.

Although respondents are enthusiastic about AI’s potential, most say it has had a moderate impact on their operations.

“Most respondents believe human oversight is essential and are implementing safeguards like training, governance frameworks and internal software tools to mitigate risks,” Moody’s says in a report.

Managers are concerned about poor data being used for AI, and Moody’s says this may explain why uptake of large language models to process large data sets is higher than for other forms of AI.

Compliance officers are concerned about data privacy and mistakes, and fear teams will become over-reliant on AI, losing critical human judgment and expertise.

Companies also worry about lack of internal expertise in AI, regulatory uncertainty and compliance risk, and difficulty integrating new technologies with legacy systems.

Find out how to crawl, walk and run your way to AI "nirvana" in the latest Insurance News magazine