AI in Claims: Efficiency for Insurers Comes with New Liability Risks
Insurers face new liability risks as AI speeds up claims processing. Clear governance and accountability are essential to manage bias and explainability challenges.
AI in Claims Raises Liability Concerns for Insurers
Insurance companies are under increasing pressure to adopt artificial intelligence (AI) in claims handling to boost efficiency. A recent report by DAC Beachcroft highlights that while generative AI offers clear benefits—like speeding up fraud detection, triage, and processing unstructured data—it also introduces new liability risks.
The law firm points out key governance challenges that come with AI adoption, including issues around bias, explainability, and accountability. These concerns are critical as insurers look to balance innovation with responsible use of AI.
Governance and Liability Challenges
Executives interviewed for the report generally reject fully automated claims decisions. However, they recognize that increasing reliance on algorithms means boards must strengthen oversight. Regulators and courts are unlikely to accept “the machine did it” as a defense, placing liability squarely on insurers—and potentially on individual directors.
This shift means insurers need clear governance frameworks and transparent AI models to manage risks and demonstrate accountability effectively.
What Insurers Should Focus On
- Bias mitigation: AI systems must be regularly audited to prevent discriminatory outcomes.
- Explainability: Claims processes powered by AI should be transparent enough for human review and regulatory compliance.
- Accountability frameworks: Insurers need to assign clear responsibility for decisions influenced by AI to avoid liability gaps.
Those working in insurance claims should stay informed about emerging best practices and regulatory expectations around AI. Investing in AI literacy and training can also help teams manage these tools effectively and responsibly. For practical AI learning resources tailored to professionals, explore Complete AI Training’s insurance-specific courses.
The full DAC Beachcroft report will be explored in detail in the upcoming issue of CIR Magazine.
