It goes without saying that Artificial Intelligence (AI) is already an extension of our lives, both at a personal and economic level, with an increasingly high adoption by companies thanks to its multiple benefits. Its development and progress have been analyzed and promoted for more than a decade, and we have only just begun to extract its full potential.
Heavy investments by technology giants in research and development are fueling advances in the field of AI. In turn, organizations’ confidence in AI and their perception of the technology as a key driver of their growth are driving their increased investments. According to recent estimates from the consulting firm Precedence Research, the AI market will grow at a compound annual growth rate of 38.1% from 2022, reaching $1.591 billion by 2030.
Despite the enormous potential of this technology, organizations still have a long way to go in its adoption, especially when it comes to a responsible, sustainable, and secure adoption, what we are calling Responsible AI.
A large part of the business fabric – as it is the case of the insurance sector itself – is still learning how to use AI, applying it to use cases in test environments or with very controlled impacts, all given that the risks (operational, ethical, and regulatory) are complex and, in many circumstances, little known. Frameworks, tools, guidelines, and legislation – such as the recently approved Artificial Intelligence Act in Europe or many other laws around the world – are necessary, and all actors involved (international regulatory agents, researchers, users, technology providers, or integrators, among others) must collaborate with each other to ensure its proper adoption and end-use.
A potential for the global economy worth trillions of dollars
AI can perform a wide variety of routine tasks, from sorting data, to creating texts, automating inventory in a warehouse, or handling claims. As a result, it is increasingly permeating business tasks and operations, as well as society’s day-to-day life.
In addition, it has very positive effects at the economic level and can enable interrelated technological developments that will increase the rate of productivity. As such, it is a general-purpose technology that is needed to drive development and help solve many of today’s problems and challenges.
For example, according to McKinsey, generative AI, on which great efforts are being put right now, has an effect on productivity worth of trillions of dollars for the global economy. As far as the insurance sector is concerned, the consultancy quantifies this impact at between $50 billion and $70 billion per year.
The role of insurers in mitigating AI risks
As use cases scale within companies and regulation becomes clearer, awareness of proper AI risk management will increase and, with it, the demand for services associated with the proper management of those risks. Insurers can and must act as a catalyst in this process and assist our clients in their responsible and sustainable deployment.
Currently, the offering of insurance covering risks associated with the use of AI is limited. Autonomous vehicles or systems used in industrial processes are the first examples where such type of insurance is beginning to appear. It is precisely in these areas where demand is expected to increase in the medium/long term, extending to the insurance of any system that is entirely managed by AI algorithms. In other words, systems that are automated from start to finish, in which the decision is made by AI without human intervention.
Existing insurance products should be reviewed taking into account how customers are using this technology in their businesses. The role of the insurance sector is to accompany clients in the deployment of responsible AI to protect them, individuals, and society in general, preventing and avoiding any undesired behavior and guaranteeing a solution and coverage if necessary.
In this regard, insurers must lead the way in adopting and employing responsible and ethical governance of AI by researching, evaluating, and developing an offering that better supports other organizations’ use of the technology.
AI can and should be deployed responsibly and with the goal of generating positive impact. All stakeholders involved must work together to achieve this and build the economy and the society of the future we want to be part of.
