The insurance industry has to beware sleepwalking into an AI minefield, with repercussions running into billions.
There are two types of AI: Transparent and Opaque.
Insurers using Transparent AI will be able to explain to the regulator every decision their AI system made on their behalf, how and why.
Insurers using Opaque AI face a massive problem. They will have no audit trail, no explanation of how or why and leave themselves open to serious regulatory and legal actions. This could easily be the next PPI scandal.
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After spending billions of dollars on cutting-edge artificial intelligence technologies, Europe’s insurers and banks face tougher scrutiny of the tools they use to help root out fraud, check borrowers’ creditworthiness and automate claims decisions. European Union rules starting this week will stress human oversight and consumer protection, which may hamper companies trying to build the tools of the future. The law is being closely watched by the insurance industry, where four out of five executives say that AI systems will be used alongside human staffers within the next two years, consultant Accenture said in a report this year.