Creating AI regulatory framework set to be ‘significant piece of work’ in 2024

Introducing a regulatory framework for artificial intelligence (AI) within the insurance industry could end up being a “significant piece of work” during 2024.

That was according to Biba chief executive Graeme Trudgill, who told Insurance Times that the association’s broker members had raised concerns about the technology as its popularity continues to grow.

AI is already being used across the insurance sector, with it being adopted in a range of ways.

This includes assisting with remote home inspection for quotes and claims, fraud detection, client verification, chatbots in customer support and improving the underwriting of schemes.

Trudgill said that while there was a “real interest” from Biba’s members in AI, there was a growing recognition that suitable regulation needed to be in place.

“It is a good thing to have new technology that is going to help with our businesses and help client efficiencies,” he added.

“But we need to make sure that we have the right framework in place and that is something that could well be a significant piece of work for this year.”

He added that any potential framework for AI would “need to be safe and reliable”. 

“I don’t think all AI is 100% accurate at this point in time, so there are some issues around that,” Trudgill said.

“[For example], some machine learning hasn’t got quite as far as some other machine learning and therefore, the framework needs to be reliable.”

Code of conduct

While no regulation over the use of AI has been introduced yet, a new code of conduct has been created to establish a standard of responsibility when insurance firms are using AI for claims settlements.

Firms have been urged to sign up to the new code and implement its principals as well, which includes fairness, accountability and transparency of AI applications.

It came as a result of a collaboration between 127 specialists in the market, including Hugh Hessing, former UK chief operating officer of Aviva, Prathiba Krishna, head of AI and ethics at Sas UK and Ireland and Simon Murray, head of insurance at DWF.

Director of Jel Consulting Eddie Longworth, who led the collaboration, said the code was “built on general principles as much as detail”.

Trudgill said that the code of conduct had been welcomed by Biba after Longworth presented the idea to its broker standards committee.

“We agree there needs to be a suitable regulatory framework around AI,” Trudgill added.

“There was a presentation of the voluntary code by Eddie to our insurance brokers standards committee very recently, which was well received.”

Manifesto pledge

Biba’s insurance technology and innovation committee is now set to bring forward innovative AI solutions to help support the needs of the insurance broking sector as firms follow the code.

The association has also pledged to produce new guidance for members on harnessing the benefits of AI and associated technologies in its 2024 manifesto.

The document, entitled Managing risk for growth and economic security, outlined the trade body’s agenda for the year ahead.

Trudgill said that, when the association was consulting with brokers up and down the UK over the manifesto, it had AI experts on hand to provide insights into ways it can be used.

“That was really helpful as they were able to talk to brokers about some of the benefits and some of the pitfalls,” Trudgill said.

“We have also promised to do a guide on it within the next year because there is a real interest from members.”