From streamlining claims processing to enhancing fraud detection, AI is enabling insurers to operate more efficiently while delivering better service to customers. In fact, a recent report from Accenture shows that 29% of working hours in the insurance industry can be automated by gen AI. However, this also raises critical questions about maintaining a personal connection with policyholders and, most importantly, using this technology responsibly.
“The average ransomware demand now stands at $1 million, with typical payouts ranging between $500,000 and $600,000,” shared Derek May (pictured), VP of technology and cyber at Hub International Insurance Brokers, highlighting the growing threat of cyberattacks. Adding to the concern, the cost of cybercrime recovery for Canadian businesses has skyrocketed, doubling from approximately $600 million in 2021 to $1.2 billion in 2023, underscoring the escalating financial impact.
Understanding this risk landscape is particularly important as the insurance market continues to buzz about agentic AI, which refers to systems designed to act independently, making decisions without the need for constant human oversight. While human involvement will always play a critical role, AI has the potential to revolutionize traditionally tedious and time-consuming tasks.
Speaking on the benefits of AI in insurance, Khalid Lahraoui, global and EMEA insurance lead at Accenture, shared: “Modern core systems that accommodate gen AI capabilities, automation and real-time data sharing, enable faster, more accurate claims and underwriting decisions, reduce operating costs and speed new products and services to market.”
AI can also help with fraud detection. With the ability to independently monitor patterns and detect anomalies, it has the potential to identify fraudulent activities faster and more accurately, minimizing losses for insurers.
However, AI tools also present a double-edged sword. If not properly integrated, they can create legal and privacy risks for brokers and insurers, especially as hackers become more sophisticated. Integrated systems may provide more entry points for cybercriminals to steal sensitive data, highlighting the need for strong safeguards and regulation.
Last year, CISRO (The Canadian Insurance Services Regulatory Organizations), issued a cybersecurity readiness guide to help insurance intermediaries understand the risks associated with gen AI usage and ensure they are adequately prepared to integrate it into their businesses.
“While intermediaries may turn to artificial intelligence to improve the efficiency of their businesses, they must be aware that it comes with some risks and challenges they must address,” shared Sylvain Théberge, director of media relations and public affairs, at the Autorité des marchés financiers.
Accordingly, CISRO’s guidelines include helpful questions that brokers can review with clients to help mitigate AI loss exposures, such as:
Of course, CISRO’s recommendations are best used in tandem with properly implemented cybersecurity policies and internal incident response plans, particularly in the event of a breach.
As shared by NFP’s Mila Araujo, AVP, digital shield, personal cyber practice leader, North America:
“Having an incident response plan in place that involves not only the technical team but also the marketing, legal, and compliance departments, and having regular touchpoints with these key players to run through various event scenarios, ensures you're not solely relying on your insurance policy at the time of a major incident.”
With cybercrime rates escalating, cyber insurance rates could be on the rise, too. In light of these higher stakes, brokers must play a critical role in ensuring their clients take the necessary precautions to mitigate AI risk and secure the best value from their cyber insurance policies.
Araujo emphasized, “I think the key tip is to take a 360-degree approach—not just viewing cyber insurance as something that will save the day, but ensuring you're prepared to use it effectively. If you're not meeting your policy’s requirements, you may not have coverage, even if you’ve bought the policy.”
For more insights on the cyber insurance landscape, check out Insurance Business’ power panel here.
