Global law firm DLA Piper, in partnership with The Fintech Times and The Fintech Power 50, recently hosted a fascinating evening event at its head office in London addressing how established players and disrupters in the insurance industry can navigate through the complexities of artificial intelligence (AI).
Regulatory hurdles and compliance intricacies emerged as focal points, with speakers exploring the complex landscape of legal frameworks governing AI including the EU AI Act and the UK regulator’s approach to AI regulation, highlighting the importance of understanding forthcoming regulatory changes and their implications.
Contractual considerations were scrutinised, illuminating the path towards leveraging AI while mitigating associated risks. Real-world insurtech use cases were also shared, showcasing the transformative potential of AI when deployed effectively. While ethical considerations prompted introspection on aligning technological advancements with corporate values.
Let’s take a look back at the evening’s highlights.
Opportunities with AI
Pierre Berger, a corporate, financial services and insurance partner in the firm’s Belgian offices, kicked off the evening with an introduction outlining how AI has the potential to profoundly reshape society, altering how we work and interact.
Despite concerns about job displacement, Berger sees AI as a source of innovation and prosperity.
He reassured the audience that regulatory hurdles and compliance issues need not hinder the opportunities presented by AI, citing examples of tech leaders viewing regulations as beneficial for business growth.
Berger also underscored the multifaceted roles AI can play, from serving as a personal assistant to transforming industries like insurance.
“My partners and I are convinced that there are many opportunities and, in our view, data governance, compliance and regulations do not necessarily negatively impact on those opportunities. Some leaders of big tech companies I speak with even stated AI regulations will help them growing their business in the field of AI,” said Berger.
AI and the law
Next up came James Clark, a data protection, privacy, and cyber security lawyer at DLA Piper’s Leeds office, who outlined the current and forthcoming regulatory landscape for AI.
He highlighted the diverse legal frameworks indirectly impacting AI development, including data protection, employment, and intellectual property laws. Clark also shed light on forthcoming regulations like the EU AI Act and the UK’s decentralised approach to AI regulation.
“If you are the provider of an AI system, you have to be able to demonstrate that you’ve put a range of controls in place when you are building an AI system in terms of data quality, data governance, technical security around the AI system, and then ultimately complete a conformity assessment,” he explained.
AI in insurance
Alexander Hamels, a financial services and insurance lawyer at DLA Piper in Brussels, then took the audience on a journey through the disruptive potential of AI in insurance.
He painted a vivid picture of AI’s transformative power, from shaking up product design to streamlining claims management. Despite the industry’s cautious approach, Hamels highlighted real-world examples of AI’s impact, such as a 30 per cent optimisation in claims management processes.
However, he didn’t shy away from addressing the risks, including biases, discrimination and customer satisfaction challenges. Hamels stressed the importance of responsible AI implementation, highlighting the need for robust risk assessments, governance measures and data protection safeguards.
Hamels commented: “The successful implementation of AI tools can be a competitive advantage for insurance undertakings. There are use cases across the entire value chain of the business. However, there are important risks involved, which are on the radar of regulators and legislators. It is the responsibility of the industry to proactively develop solutions to address these risks to avoid regulatory intervention.”
Contractual considerations for AI
DLA Piper legal director Nichola Donovan offered insights into the critical assessment of AI service commitments, cautioning against presuming inherent reliability and highlighting the necessity for comprehensive evaluation before implementation.
She explained the importance of scrutinising liability, intellectual property ownership, and potential third-party infringement risks. Donovan also discussed the evolving nature of liability in AI contracts, stressing the need for a balanced approach to risk and reward.
Finally, she outlined key considerations regarding restrictions on usage, service levels, and oversight, particularly in comparison to traditional human-led service delivery models.
“AI can be difficult to explain and understand and that can make oversight and control more challenging,” she said. “So perhaps think about putting the onus on the supplier to have those quality assured systems and controls in place, and also potentially a proactive obligation to notify you in the event that things go wrong so you get that critical early warning notice and you have the opportunity to take steps on your own side to mitigate those potential losses.”
Insurance use cases
Up next was Chris Halliday, director at Willis Towers Watson (WTW) – a primary and reinsurance broker, multi-discipline consultant, risk adviser and specialist technology provider – who talked about use cases in insurance for AI and data science, drawing from his extensive experience as an actuary.
He outlined the evolution of AI over the years, especially the emergence of generative AI and its transformative potential in areas like code development and customer retention strategies.
One area he underscored the significant impact of AI was on enhancing operational efficiency and improving customer service, particularly in the context of claims management.
Despite the opportunities presented by AI, Halliday also outlined various challenges, including organisational friction, integration with legacy systems, and governance and ethical considerations.
He advocated for a collaborative approach and a robust target operating model to effectively harness the power of AI in insurance operations.
AI and insurtech
Sharing her insights and experiences in on-demand insurance for SMEs and freelancers, Janthana Kaenprakhamroy, CEO at Tapoly, offered a refreshing perspective on the practical applications of AI in the insurance industry.
With a blend of personal anecdotes and industry knowledge, she touched on the value creation potential of AI, particularly in the development of new products tailored to specific needs and the enhancement of customer experiences through 24-hour service capabilities and personalised insurance offerings.
Kaenprakhamroy delved into real-life use cases, showcasing how AI can streamline operations, improve risk assessment and fraud detection, and redefine claim processing. She also highlighted the significance of aligning AI strategies with business goals and fostering a supportive team culture, saying:
“Culture, I would say, is one of the biggest challenges for any AI implementation. And from my personal experience of developing a successful AI strategy, the number one priority for me is to work out your goals goal and what the end result you want with your AI project.”
AI in insurance: panel discussion
Concluding the event Jonathan Clarke, partner at DLA Piper in Birmingham, moderated a lively panel discussion, touching on the key themes that drove the evening’s discussions. He was joined by Kaenprakhamroy, Halliday and George Mortimer, a partner at DLA Piper in London as they discussed the intricate relationship between the AI and insurance, focusing on ethical implications and sustainability considerations.
The panel discussion was particularly engaging, with many insurer and insurtech clients in the room adding to the liveliness of the session. Challenging questions from the floor further enriched the dialogue,with topics ranging from concerns over the insurance market’s dual focus on AI and environmental, social, and governance (ESG), and the impact on lawyers when the EU AI Act comes into force, in particular the need for additional training.
Transparency emerged as a key theme, with speakers discussing the importance of transparent machine learning algorithms and the regulatory focus on outcomes rather than understanding every parameter. Additionally, the discussion touched on the significant focus of the insurance market on AI and the emerging tension between AI adoption and sustainability due to energy consumption.
Evening finale
To end the evening with closing remarks, Anthony Day, partner at DLA Piper, acknowledged the existential threats posed by AI, such as fake news and deep fakes, but remained enthusiastic about the opportunities AI presents. He touched on AI training and stressed the importance of staying informed about regulatory developments.
“I’m actually hugely infused about AI and the opportunities in this space,” he concluded.
Additional reading materials on AI can be found here: Patentability of AI – A Legal Perspective on Emotional Perception / DLA Piper, Common ground between the US AI Executive Order and the EU AI Act
