Geneva Association releases report on AI regulation
While the European Union (EU) goes over the final details of the EU AI Act and the United States begins laying the groundwork for an AI roadmap, the only global association of insurance companies is weighing in on regulation of AI in insurance. The Geneva Association (GA) released a report that analyzes the regulatory developments for AI applications as well as their impact on insurance companies around the world. The report starts out by stating that while AI is transforming the industry by offering expanded risk pooling, reduced costs, risk prevention and mitigation, and improved customer service, it does also post a lot of risks like bias, discrimination, exclusion, lack of transparency and data privacy issues.
For the report, the GA looked at several insurance markets where AI regulation is being looked at and/or is happening. Those markets include Australia, China, the EU, Japan, Singapore, the United Kingdom and the U.S. The report notes that the EU has the most ambitious legislation when it comes to AI regulation and bias audits. The report says that under the EU AI Act, insurance utilizes AI applications that are deemed as high risk. Those applications, which are deemed high risk, are used by insurance companies for underwriting. In the insurance field, underwriting involves assessing and clarifying risks, and pricing those risks. For instance, AI could be used to assess your risks and overall cost for life and health insurance. Outside of that, the report says that most of what is stated in the EU AI Act most likely encompasses all of the analytical methods already used by insurers. As for the U.S., despite several guidelines issued by federal entities and several state laws, the report believes that regulation of AI in the insurance industry is already mainly shaped by existing anti-discrimination laws at the state and federal level.
When it comes to regulation, the report talked with several insurance industry experts who ultimately believe in insurance-specific regulation, but found that cross-sector AI regulation may end up hindering innovation because it doesn’t consider some of the unique characteristics in the insurance industry. That’s why the report concludes with a list of several ideas for policymakers and regulators moving forward. The report believes that they should carefully define AI for regulation, apply and/or update existing regulations, develop principles-based regulation, consider the unique uses of AI systems in insurance which would require unique regulations, focus on the customer outcomes through data governance and collaborate on AI guidelines and regulations internationally.
Many more industries are expected to weigh in on AI regulations, AI assurance and other issues as more and more countries begin to examine how to move forward with AI. If you have questions about AI and how the rapidly changing legal landscape could affect your company. Reach out to BABL AI, they can answer all your questions and more.