AI boosts insurance tech financing, raises concerns about deepfakes, says report

According to a report from reinsurance broker Gallagher Re, global financing for insurance technology (insurtech) companies saw a significant increase of 40% to $1.27 billion in the second quarter of this year, primarily driven by investments in AI-focused businesses. While artificial intelligence has delivered benefits to the insurance industry, the report highlights certain challenges associated with its use, reports Reuters.

One major concern mentioned in the report is the risk of "deepfakes" in fraudulent claims. Gallagher Re raises awareness about the potential misuse of AI to create convincing but fake images and videos, which could perpetuate insurance fraud. The report acknowledges that this poses a significant challenge to the industry.

Moreover, the report emphasizes the exclusion of potential customers resulting from the use of AI models. While AI plays a valuable role in insurance pricing and underwriting, solely relying on AI for underwriting processes has shown limited success. The report suggests that completely removing the human element from the underwriting process could hinder effective decision-making.

Despite these concerns, companies involved in the insurance industry continue to invest in AI technologies as a means of automating tasks and reducing costs. However, there are fears that widespread adoption of AI could lead to significant job losses within the sector.

Gallagher Re's report reveals that approximately one-third of total insurtech funding in the second quarter was directed towards AI-focused companies. The integration of AI-powered risk assessments has the potential to shift towards individualized pricing, which could prove beneficial for certain customers but render others uninsurable.

The report stresses the need for caution in regards to deepfake technology. The ability to create deepfakes that appear genuine poses risks to the authenticity of insurance claims. Andrew Johnston, global head of insurtech at Gallagher Re, suggests that disguising the truth with highly realistic artificial imagery presents substantial issues for the industry.

Nevertheless, the report highlights the practicality of using AI in managing large amounts of data and expediting administrative tasks within the insurance sector. Additionally, it holds optimism that AI has the potential to address its own challenges by, for example, developing methods to identify and detect deepfakes effectively.

In conclusion, AI has significantly impacted the financing and operations of insurtech companies. While it offers numerous advantages, the challenges related to deepfakes and potential customer exclusions should be taken seriously. Balancing the benefits and risks of AI integration remains a vital focus as the insurance industry continues to forge ahead in leveraging technological advancements.

Earlier SSP reported that Apple's scheduled release of AI features will be delayed.