Insurers need to update their processes to keep up with technological advancements in the industry, especially as cyber risk has become the top insurance risk in modern years.
With the use of artificial intelligence becoming more prevalent in the insurance industry, traditional system safeguards and outdated legacy systems are no longer sufficient to address the complexities that this technology brings to certain processes, exposing insurers to regulatory and technological weaknesses, according to a new report.
Arzoo Wadhvaniya, research analyst at Info-Tech, said that while AI systems promise accuracy and efficiency, they also pose privacy concerns. “A single breach could compromise thousands of customers’ personal information, causing severe reputational and financial damage.”
Info-Tech Research Group recently released its latest blueprint providing insurers with a framework to tackle the challenges of data privacy in the age of AI.
Among the company’s recommendations are: AI training, strong data governance and proactive risk management, in order to help insurers protect personally identifiable information (PII) of their customers, while leveraging AI for underwriting, claims processing and customer engagement.
Info-Tech’s research highlights three key risks associated with AI – data breaches of PII; noncompliance with regulations; and insider threats.
These key risks, Info-Tech said, are tied to generative AI and could lead to other threats like data theft and data manipulation.
Research findings also suggest that unfamiliarity with integrated AI technologies often confuses employees when assessing risks and determining appropriate applications. This AI confusion, coupled with complex regulatory requirements, increases compliance challenges, Info-Tech said.
“Regulatory frameworks demand strict compliance, yet AI introduces complexities that make this harder,” Wadhvaniya said. “Insurers must ensure AI respects customer consent, limits data usage and mitigates bias. Otherwise, the consequences could be costly in terms of both fines and lost trust.”
In order to effectively leverage AI and secure digital data, the firm advises insurers to conduct AI training for employees, implement robust data governance practices, ensure transparency and responsible use of the technology.
“By leveraging insights from this blueprint, insurance companies can effectively address growing data privacy challenges while adopting advanced AI technologies for underwriting, claims processing and customer engagement,” the company said.
