AI in New Zealand Insurance Drives Innovation and Sparks Calls for Smart Regulation

AI’s Expanding Role in New Zealand’s Insurance Sector Sparks Regulatory Discussion

Artificial intelligence (AI) is increasingly integrated into New Zealand’s insurance industry. Companies are using AI, machine learning, and data analytics to improve underwriting, claims management, and customer interactions. According to Fintrade Securities Corporation Ltd (FSCL), these technologies automate routine tasks and assist staff in decision-making rather than replacing human roles.

AI Integration Across Core Insurance Operations

Machine learning models now help insurers assess risk with more diverse data, including behavioural trends, geographic details, and economic indicators. This enables more precise and dynamic risk evaluations. Insurance’s heavy reliance on paperwork has driven the adoption of intelligent document processing (IDP) systems. These systems use optical character recognition (OCR) and natural language processing (NLP) to digitise and interpret documents, reducing manual input, minimising errors, and speeding up claims and policy workflows.

NLP also extracts key information from customer communications, enhancing efficiency and service quality. AI tools enable insurers to move beyond traditional demographic pricing. Real-time behavioural data supports personalised insurance products, such as usage-based policies adjusting premiums based on driving habits or lifestyle. AI can also provide proactive risk alerts to policyholders, like severe weather warnings or property maintenance reminders.

Growing Investment in Generative AI in the Region

Research by Snowflake and the Enterprise Strategy Group shows that organisations in Australia and New Zealand allocate a larger share of their tech budgets to generative AI (GenAI) than the global average. Thirty-two percent of surveyed firms in the region invest over 25% of their technology budgets in GenAI, compared to 25% globally. These investments yield slightly higher returns, with a 44% return in ANZ versus 41% worldwide.

Calls for Specific AI Regulation

As AI usage grows, calls for clearer regulation intensify. Over 20 AI experts have urged the New Zealand government to establish an AI regulatory framework, citing concerns about public trust and risks. Dr Andrew Lensen from Victoria University of Wellington points to the European Union’s AI Act and Australian proposals as practical examples of risk-based regulation.

He notes the EU AI Act’s risk framework could serve as a starting point, though New Zealand may not need such a complex model. Without regulation, risks include deepfakes, fraud, biased automated decisions, increased emissions, and intellectual property issues.

Chris McGavin of LensenMcGavin AI emphasises the importance of a regulatory approach that reflects New Zealand’s unique context, including Māori Data Sovereignty. He explains that most jurisdictions favour risk management models where regulatory intensity matches the perceived risk of AI applications. Regulatory uncertainty, he warns, may slow innovation and undermine public confidence.

Legal and Social Challenges for Insurers

Legal experts caution that current laws may fall short in addressing AI’s emerging risks. Dr Cassandra Mudgway from the University of Canterbury highlights that existing legislation does not adequately cover generative AI issues like non-consensual image creation and chatbot-enabled abuse.

Dr Kevin Shedlock of Victoria University stresses the need for governance models that safeguard Māori interests and respect Te Tiriti o Waitangi. He warns that unchecked AI could deepen biases and spread misinformation, disproportionately affecting Māori communities.

Need for National Coordination

Professor Ali Knott of Victoria University advocates for a national AI oversight body. This entity would coordinate New Zealand’s input into international AI safety discussions and manage domestic legislation. Dr Olivia J. Erdelyi of the University of Canterbury stresses that regulatory uncertainty could limit AI’s benefits and safe adoption. She warns that inadequate or inappropriate regulation will hinder the economy’s functioning and the effective use of AI.

For insurance professionals looking to deepen their AI knowledge and stay ahead, exploring AI courses tailored to industry roles can provide practical skills and insights.