In a world where technology seems to leap further and further ahead each day, artificial intelligence (AI) remains a transformative force, revolutionizing industries across the board. Insurance agents and their clients are witnessing a complex paradigm shift as businesses adapt to the digital age. Some of these AI advancements open companies up to increased liabilities and exposures, while others improve safety measures and streamline operational efficiencies.
While the AI waters may feel a bit murky as we figure out how to best leverage its benefits and guard against its risks, one thing is abundantly clear: artificial intelligence is here to stay, and insurance professionals need to be aware of how it can impact their clients. In this blog post, we will explore three big ways AI is reshaping the insurance landscape and discuss the implications for both businesses and the insurance professionals who serve them.
1. AI Heightens Cyber Terrorism Risk
A recent study released by Deep Instincts surveyed 650 U.S. senior security operations professionals and found that approximately 70% of organizations have adopted generative AI tools. Companies across all industries are leveraging the power of AI in a variety of ways to improve business efficiencies and better serve customers.
Unfortunately, AI can also be harnessed for malintent, and cyber criminals are taking full advantage of its capabilities. The Deep Instincts survey also found that 46% of security operations professionals feel that generative AI will make organizations more vulnerable to attack. Even worse, three-fourths of respondents saw an increase in attacks over the past year, and 85% of them attributed this trend to criminals leveraging generative AI technology.
Many of us are familiar with (and have probably even tried) ChatGPT, a prompt-based AI model that can assist users with a number of business tasks — writing email drafts, summarizing concepts, answering questions, generating article or speech outlines, brainstorming names or titles, translating text, etc. But did you know that there are blackhat alternatives? There are AI tools specifically designed for bad actors to more quickly and easily carry out their own nefarious plans, like writing highly-personalized and persuasive phishing emails and messages.
As businesses grapple with the growing menace of cyber terrorism, insurance professionals play a crucial role in ensuring that clients are adequately prepared, both by supporting them in implementing strong security-risk-management measures and getting proper coverage that protects against the repercussions of ever evolving cyber threats.
2. AI-Generated Content Can Increase Media Liability Risk and Exposure
AI algorithms have become increasingly sophisticated, blurring the lines between human-generated and AI-generated content. The algorithms can autonomously create a wide range of media — articles, reports, social posts, videos, music, graphics, art, and more — with just a few prompts and directives. These advances raise a number of questions about accountability and liability risks in the event that AI-generated content results in intellectual property infringement.
AI algorithms are “trained” to create their content using examples of existing work, which has resulted in concerns around intellectual property and copyright infringement. There are a number of legal cases making their way through the courts where authors, artists, and other creators are claiming that generative AI platforms used their original works — without licenses — to train their tools. If courts rule in favor of the artists and creators, this could have big implications for the businesses that use these generative AI tools. They may also be at risk for claims of copyright infringement.
According to Business Insurance, insurance companies aren’t jumping to exclude or place limits on AI-related exposures just yet, but AI copyright infringement will be an important issue for agents to continue to watch. Insurance agents need to be proactive in addressing these emerging AI risks and exposures and work closely with their clients who use (or are considering) AI tools for their business practices. The unpredictable nature of AI-generated content necessitates a thorough understanding of the risks involved — and whether an insured’s existing coverage will protect them in the event of a claim.
3. AI Will Continue Offering New Ways to Serve Insureds
While AI can — and is — complicating the insurance landscape, it’s adding great value as well. Just like every other industry, insurance is also exploring how we can harness AI to become more effective and efficient. This is bearing out in a variety of ways, like improved risk assessment, enhanced claims processing and fraud detection, and streamlined customer service — just to name a few.
Improved Underwriting and Risk Assessment
The insurance industry relies on historical data and actuarial models to assess risks and determine premiums. AI technology adds another tool to an underwriter’s toolkit by enabling them to process vast amounts of information in real time and create a more complete picture of exposure and risk. Machine learning algorithms can analyze intricate patterns, identify correlations, and predict potential risks with unprecedented accuracy. For insureds, this means a more precise evaluation of their liability exposure. AI algorithms can also take into account a multitude of factors — including market trends, socio-economic changes, and even climate patterns — providing a comprehensive risk profile that aids expert underwriters in making decisions that best serve their companies and their insureds.
Enhanced Claims Processing and Fraud Detection
AI is eliminating some of the bottlenecks in the claims process by automating claims handling through advanced algorithms and natural language processing. It’s also proving to be a formidable weapon against fraud. Insurance fraud costs businesses and insurers billions of dollars annually. With AI-powered fraud detection systems, insurers can identify suspicious patterns, anomalous behavior, and potential fraud schemes in real time. This not only protects the interests of businesses but also ensures the sustainability of the insurance industry by curbing fraudulent activities.
Streamlined Customer Service
While usually nothing beats having a live, knowledgeable person you can talk to, there are some situations that may not require that, like basic policy questions, claims status updates, and billing/payment information. By leveraging chatbots, insurance companies are able to offer around-the-clock support and provide customers with quick answers when they need them.
Stay at the Forefront of Insurance Trends with Jencap
By keeping a pulse on AI advancements, insurance agents can not only protect their clients, but also play a pivotal role in shaping a resilient and adaptive future for the insurance industry. While firsthand research and understanding are essential, it can feel daunting and overwhelming to stay current on such a quickly evolving technology. That’s where an expert like Jencap can step in. Our cyber professionals can give you confidence that you’ll always be “in the know” and ahead of emerging cyber trends, ensuring you can offer the best guidance and recommendations for your clients.
Contact Jencap today to speak to one of our cyber brokers and learn more about how we can put our cyber capabilities to work for you.
