KBRA releases research that explores the potential benefits and risks of artificial intelligence (AI) in insurance, along with key governance considerations. AI’s presence across the insurance sector has ramped up materially, with many insurers already implementing AI-driven processes or establishing frameworks to harness its potential. In KBRA’s view, insurers that effectively deploy AI can achieve greater efficiency, increased productivity of agents and employees, and improved customer satisfaction—factors that could positively impact revenues, expenses, and other credit considerations. These benefits could quickly become table stakes, and insurers left behind could find themselves at a competitive disadvantage.

Key Takeaways

• Marketing/distribution, underwriting, claims processing and customer service are areas ripe for the implementation of AI tools that can enhance efficiency. However, the quality and quantity of data, both internal and external, are key to maximizing many of the anticipated benefits. For some insurers, data quality and availability, rather than quantity, may pose material challenges—particularly when information remains housed on legacy systems. Developing and implementing a cohesive data strategy is a vital prerequisite for a successful AI initiative.
• While AI offers many potential benefits, there are also risks that must be managed, as with any new technology. Industry participants have highlighted several key risks associated with AI, including unintentional bias, cybersecurity concerns, and compliance with existing and emerging industry and government rules and regulations.
• A holistic AI strategy that aligns with an insurer’s existing enterprise risk management (ERM) framework is likely the most effective approach to mitigating risks while maximizing AI’s potential advantages.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1007872

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