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July 15, 2024

Why Do AI

Artificial Intelligence Insights and News

The AI Revolution in Insurance: Part IV

1 min read

Unpacking AI Terminology

The term ‘Artificial Intelligence’ in the insurance context encompasses a broad spectrum of technologies and methodologies. Machine Learning (ML), a subset of AI, is particularly pivotal, involving algorithms that learn from and make predictions or decisions based on data. These ML models vary from simple linear regressions to complex neural networks, each with specific applications and implications in insurance. For example, deep learning, a type of neural network, is instrumental in processing unstructured data like images and text, making it invaluable in claims processing and fraud detection.

Understanding these terms and their technical nuances is vital for insurers. It enables them to not only comply with regulatory expectations but also to make informed decisions about which AI technologies best suit their needs. This understanding also facilitates transparent communication with stakeholders and regulators about how AI is used and governed.

Technical Implications and Ethical Considerations

The technical intricacies of AI also bring ethical considerations to the forefront. The accuracy and fairness of AI models depend heavily on the quality and diversity of the data they are trained on. Insurers must ensure their AI systems do not reinforce existing biases or inequalities. This necessitates a rigorous process of data selection, model training, and continuous monitoring to identify and mitigate any unintended discriminatory effects.

The next section will delve into the regulatory guidance and expectations for insurers using AI, outlining the key principles and practices that must be adhered to in this rapidly evolving landscape.