AI improves the efficiency and prospects of the insurance industry in subtle as well as profound ways. It brings more customers to the insurers as AI can increase the scope and variety of the insurance services that consumers demand. The claims management process is also faster and devoid of errors now, thanks to AI. Some sectors, especially the healthcare insurance sector are boosted by the technology even better. On the whole, AI in insurance improves the expectations of the stakeholders as well as customers and may also provide for more innovation. But the companies should understand that the insurance sector is one of the most heavily regulated sectors. Therefore while innovation may be important, the insurance firms also need to overcome and avoid the pitfalls that a negligent attitude and functioning may cause. They should have a legal compliance management system for managing all their operations in a safe way.
AI and Compliance
Ai involves machine learning, visual recognition, deep learning, NLP or Natural Language Processing and speech recognition. Apart from the span and scope of it, the AI technology is also improving fast in terms of technology. Authorities are trying to keep pace with the developments and are also evaluating existing regulations while changing them or adding new ones wherever appropriate. Regulators also need to fill in the gaps that exist between the AI technology and their own surveillance procedures and resources.
The GDPR (General Data Protection Regulation) framework has been implemented in the European regions and affects multiple transformation areas. AI will affect aspects including claims management, pricing, and its optimization, customer data recordkeeping and usage, disclosure and the payment processes as well, among others.
User and sales experiences are heavily affected by compliance issues including embargo and sanctions, data and its traceability and identity validation. Many of the common exposures could be prevented when underwriting is automated with the help of AI. These many topics are being scrutinized by the regulators worldwide. AI can be used for financial reporting and tax purposes as well, but the companies would be required to have proper and compliant data recording and processing procedures. This would ensure the presence of evidence for all critical issues and transparency.
The use of AI in complaint ways should also be an important goal. According to the IDD or Insurance Distribution Directive, customers should be provided with all possible services along with information on the performance and price of these services. But when AI forwards highly customized and personalized information to the clients, it may not provide it as per IDD. AI may also not provide equal treatment (as in cases of origin and gender) in all instances. Companies should hence wait for clear regulations and should not act in haste. They should also work to find out the pitfalls that may exist in different areas in the value chain. Firms should also remember that the digitized processes and value chains may not always adhere to the regulations and statutes. Making use of the latest legal compliance software in India may help firms locate the faults and run the audits without any issues. The expert audit and compliance services help firms face compliance and regulatory issues at very affordable cost and companies also gain their own expertise in handling the legal compliance management system in due course of time.