The threats associated with artificial intelligence (AI) applications could easily counterbalance the potential benefits if the technology falls into the wrong hands.
A new report from insurance firm Allianz warns that AI will leave businesses more open to malicious cyber attacks and technical failure, increasing the likelihood of large-scale disruptions and “extraordinary financial losses”.
As societies and economies become increasingly interconnected, companies will also face new liability scenarios as responsibility for decision-making shifts from humans to machines.
Allianz said these risks might be greater than the possible benefits for businesses, such as increased efficiencies, fewer repetitive tasks for staff and better customer experiences.
Other potential benefits for wider society include helping doctors diagnose cancer, reducing motor accidents through driverless cars, better financial advice and improved weather predictions.
“AI comes with benefits and risks in many areas: economic, political, mobility, healthcare, defence and the environment,” Allianz Global Corporate & Speciality head of emerging trends, Michael Bruch, said.
“Active risk management strategies will be needed to maximise the net benefits of a full introduction of advanced AI applications into society.”
It is estimated that a major global cyber attack has the potential to trigger losses in excess of $50bn (£35bn), while even a half-day outage at a cloud service provider could generate losses of around $850m.
Allianz argue that insurers will have a crucial role in helping minimise these risks, but that the industry will need to better address exposures to businesses like cyber attacks, business interruption, product recall and reputational damage.
This is expected to involve new liability insurance models, increasing the pressure on manufacturers and software vendors while decreasing the strict liability of consumers.
Bruch said that AI presents many opportunities for insurers, giving them and their customers a much better understanding of the risks that need to be mitigated, while also enabling 24/7 service.
“There is huge potential for AI to improve the insurance value chain,” he said. “Initially, it will help automate insurance processes to enable better delivery to our customers. Policies can be issued, and claims processed, faster and more efficiently.”
There were a record 66 InsurTech investment deals recorded in the first quarter of this year as insurers continued to look to start-ups to improve their claims handling and underwriting excellence.
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