Technology and data pose fresh challenges for insurance sector’s trust issues

Technology and data both could pose fresh challenges to the insurance industry’s ongoing trust issues among consumers, according to the latest report published by the Chartered Insurance Institute (CII).

These potential problems require attention from firms of all sizes, added the institute. 

Its latest report – published last week (6 February 2023) – entitled Insurance, technology and data: Trust through a regulatory lens, examined the use of technology and data by insurers and how this could impact consumer trust.

It focused on regulatory developments across finance and technology and to what extent data could feed directly into how insurance might be viewed by customers and societal stakeholders.

Report author and founder of tech consultancy Bright Blue Hare Shân Millie noted that while the insurance sector had built on the use of Robotic Process Automation (RPA) and artificial intelligence (AI) to improve its processes, consumer concerns around the “lived experience of AI [were] demonstrably not always enhancing trust”.

This, she said, could lead to a so-called consumer “tech-lash” consistent with the experiences of other sectors, arising from problems such as wrongful arrests, sexist recruitment and erroneous qualification grading.

Millie has previously worked for the likes of the ABI as a tech and innovation associate and at Tech Nation, which will be closing its doors next month due to a lack of funding. 

Trust competitiveness

Millie said she believed that trust-competitiveness would become the critical battleground for many sectors, including insurance, in the 2020s.

She added: “If [technology and its uses] cannot be explained, or if the customer does not approve, then what might be good for business, will be devastating for trust.”

Firms’ lack of data literacy could be seen to be one major impediment to building consumer trust, alongside a failure to develop standards, structures and regulations at the same pace as technological adoption.

Millie added that previous research had already shown some pricing activities to be perpetuating and worsening social inequalities among insurance customers, including the “uneven impacts on those on low incomes”.

Meanwhile, IT leaders also have doubts around the implementation of AI in insurance – the report pointed to research from September 2021, conducted by Qlik Embedded Analytics on 500 UK IT leaders, that revealed 44% of respondents feared they could be held personally responsible for decisions automatically triggered by predictive analytics software.