AI in Insurance: Exploring Advancements and Key Trends Shaping 2025

Artificial intelligence has taken over the business world in many ways. According to the International Data Corporation, the market for AI  technology and other cognitive solutions is projected to exceed $60 billion by 2025. This is 60 times what it was 10 years ago, proving that AI is growing and growing fast. With the fast-changing business environment, business owners must understand how this technology can both help and hurt them.

AI systems can be applied as a loss control measure, helping businesses to minimize loss and make improvements where they are needed.  This can also help with claim management practices regarding your commercial coverages. In areas with high loss records, such as worker’s compensation claims, AI can be utilized as a safety tool to help reduce exposures and associated losses. AI can also increase productivity in the workplace as it improves efficiency and workflow. Decision-making is improved with AI technologies, the AI provides predictive insights and assists with the due diligence process in the boardroom. 

Using the new and advancing AI could help reduce companies’ exposures and liabilities. By providing guidance and additional needed information, AI proves to be a beneficial tool that can help your business prepare for whatever comes its way. 

Carriers are also benefitting from AI, they now have the ability to detect insurance fraud, assess unique risks, and provide assistance throughout the claims process. However, over-confidence in AI models may produce bias in the commercial insurance industry. These Ai models are all based on data inputs by humans, so any discrepancy in the inputs could skew the data it returns. There is still plenty of space for growth for AI to improve. It is important to understand the limitations associated with AI before giving it too much authority in decision-making. The U.S. Equal Employment Opportunity Commission (EEOC) recently provided businesses with guidance regarding the biases and errors in the workplace. 

A downfall of an increase in AI in the workplace is the possibility of a security breach. The more AI used in processing data, the more liability there is in a potential breach. Cybercriminals take advantage of this lack of security and weaponize the AI technology, using it to access personal data, create online scams, and steal information. The privacy and protection concerns contribute to the questionable ethics of AI.  Many crimes can be committed, both intentionally and through accidental bias in the AI systems that must be addressed. 

Regulations regarding AI are constantly changing, resulting in a large burden on companies to keep up or face legal consequences. Legislation has begun and will continue to be implemented, requiring businesses to use reasonable care in avoiding AI discrimination. 

Artificial intelligence creates a major business liability and can be a real threat, especially as more industries adopt the technology. Overconfidence in the use of AI can leave your business vulnerable to errors, biases, cybersecurity, and financial exposures. AI-related insurance helps address these liabilities stemming from the use and development of AI systems. As the use of AI expands and is more widely implemented, the need for insurance will also increase. Coverages will have to expand and be more comprehensive, including liability coverage for misinformation, defamation, physical damage caused by autonomous systems, and protection against discrimination or bias from AI decision-making. 

Artificial intelligence is an ever-changing technology, and navigating all of the new advancements can be a challenge at times. From the use of artificial intelligence in the insurance industry to using insurance to protect your use of it in your industry, it is important to continue to learn about the changing technological landscape and how we can best use it to our advantage.