The use of AI in insurance poses risks of discrimination, warns FCA chief Rathi.
- AI enables hyper-personalised insurance plans, potentially affecting consumer accessibility.
- Concerns arise over AI’s impact on fairness and possible exclusion of consumers.
- The need for open discussions on AI risks and trade-offs is highlighted.
- Current examples demonstrate AI’s benefits, yet the acceptance remains uncertain.
AI’s integration into the insurance sector brings forth significant risks of creating disparities among consumers. The chief UK financial watchdog, Nikhil Rathi, cautions that while AI technologies can revolutionise financial services, they may also render some individuals ‘uninsurable.’
Rathi stresses the importance of responsibly harnessing AI to foster innovation, citing positive outcomes such as the use of anonymous chatbots for debt advice to mitigate stigma. However, he warns of the pressing need for candid discussions about potential risks and compromises.
AI-powered hyper-personalisation of insurance could result in tailored premiums, which may not benefit all consumers. Many might be disadvantaged by such personalisation, thereby exacerbating issues of discrimination within the industry.
Rathi admits the full advantages of AI are not entirely clear but suggests that tackling fundamental challenges could lead to improved growth and productivity. He poses the question of whether the advantages for the majority outweigh the negative impacts on a minority.
He cites a recent controversy over dynamic pricing for event tickets to illustrate public concerns, implying that mere capability does not equate to public approval or acceptance.
The dialogue on AI’s role in insurance must balance innovation with fairness to ensure equitable access for all.
