These are the three most read articles in 2023…
- May 2023 - the EU AI Act is full of Significance for Insurers (read here)
- September 2023 - A Legal Spotlight Turns on Discrimination in Claims (read here)
- September 2023 - Why the Social Scoring Ban is Seismic for Counter Fraud (read here)
The first and third of these articles look at particular features of the EU’s AI Act. Since writing these two articles, the AI Act has moved forward again and I will be writing about this in an article later this month.
In the meantime, it’s clear that this significant piece of legislation is garnering a lot of attention. That said, a lot of what I’ve read about it is heavy on detail and light on insight, a balance I try to reverse in my forthcoming article, addressing as ever just what it means for insurers.
More Powerful Voices
The social scoring aspect of the AI Act has clear implications for insurers and while this includes underwriting, I think the big issues will be in relation to counter fraud. It looks like the lobbying efforts of insurers at the EU level have been countered by more powerful representations made by consumer groups. This mirrors what I’ve seen happen with the European Digital Health Space (more here).
The implications flowing from a US court case formed the basis of the second most read article. A district judge in the state of Illinois allowed a case about discrimination brought by a consumer group and law firm to proceed on one of its three counts. This means that the claims and counter fraud practices of the biggest US household insurer, plus two leading suppliers, will be examined in court. As those two suppliers operate in many other insurance markets, this is a case that will resonate across the insurance world.
Two Take Aways
Together, these three articles tell us two things in particular. Firstly, it is that the big changes happening in insurance over the next three years will be shaped not just by insurers, but by policy makers, legislators, consumer groups and legal systems. I’ve been making this point for several years.
Secondly, the use of digital decision systems in life and health insurance (designated as high risk in the AI Act) will require insurers to be much more transparent about how their systems are designed and operated. And the legal case in the US state of Illinois will bring some forced transparency to how claims and counter fraud systems work. As I wrote last week, insurers could find this heightened transparency to be a challenging experience. It is nevertheless one they should start preparing for now.
Shaping the Future
The future of insurance is by its very nature an ever evolving thing. What these three most read articles point to is that we are entering a period of refinement in relation to the design and implementation of digital decision systems. Levers need to be moved, dials adjusted, in those systems in order to meet legal and statutory necessities. And I say necessities, for despite technology firms’ hopes that new system capabilities will redefine legal and regulatory boundaries, what insurers are seeing is that digital is not going to be played by different rules.
Those who understood this from the beginning (and there are some insurers who did) will be those best placed to be on the optimum trajectory coming out of this period of strategic and system refinement.
