Possibilities and Challenges of Artificial Intelligence in the Insurance Sector

Abstract

The general interest in artificial intelligence (AI) has been on a steep rise in the last years and while it is still an emerging topic in many fields, it has already proven to provide many possibilities and benefits in various fields of business. There are a number of papers that research the use of AI applications in the financial sector, but studies focusing on the insurance sector specifically are still quite sparse although new studies are constantly emerging. Additionally, the studies that have been made on the use cases of AI applications in the insurance sector seem to lean more on presenting the positive outlooks of the technology, rather than examining the possible challenges and risks the adoption of it might present.

By conducting a literature review and a small case study, the target of this thesis was to examine what are the possibilities of AI in the insurance sector but equally so what are the possible challenges and risks of adopting the technology, as many studies seem to have less of an emphasis on these aspects. The literature review showed that on one hand, AI holds a lot of potential in various aspects of the insurance sector, including claims handling, fraud detection, customer service and underwriting. On the other hand, the implementation of AI technologies also presents numerous challenges and risks, including ethical issues and data protection and privacy concerns that have to be taken into consideration when planning on implementing AI into operation. But as the case study showed, some insurance companies have already successfully utilised AI in their operations and processes, and customer reviews seem to echo the possibilities of the technology at the moment as well.