Cedric Stephens | Insurers slow to adopt AI as service tool

The beginnings of modern artificial intelligence, according to Tanya Lewis, writing in a 2014 article, can be traced to classical philosophers’ attempts to describe human thinking as a symbolic system.

That system is a study of how symbols are used to communicate information and ideas and to represent information. The field of AI was not formally founded until 1956, at a conference at Dartmouth College, in Hanover, New Hampshire, where the term artificial intelligence was coined.

What impacts will AI have on the local insurance industry? This question has occupied my mind since OpenAI provided free, unlimited access to its chatbot, ChatGPT. Fellow Sunday Gleaner columnist Yaneek Page wrote several articles advocating the use of AI as a business tool. AI can do many things, with minimal effort on the part of the user, like drafting a 1,000-word essay on any topic. It can answer questions and even suggest business names.

Members of the local insurance industry have historically never been early adopters of technology. It is therefore par for the course not to have read or seen anything suggesting how insurers plan to use this tool to improve the quality of service they deliver to customers or increase consumers’ knowledge about their products.

Information asymmetry is widespread in the insurance industry. When two partners in a business transaction have access to the same relevant information, the relationship is symmetrical. In insurance and other transactions, however, one party, the insurer, has access to more or better information than the other party, the policyholder. This is information asymmetry.

Insurance regulators know that asymmetry exists. This is why, for example, the Financial Services Commission, FSC, imposes a duty on insurers to ensure that policy documents are written in clear language that is easily understood and must take reasonable care to ensure that information disclosed to customers, and prospective customers, is accurate, relevant, meaningful and not deceptive.

Given AI’s promise, it is surprising that the FSC has not moved more aggressively to get insurers to deploy this technology to address longstanding industry problems – much in the same way that the authorities are now using technology to change the behaviour of motorists and solve crimes.

Local AI test

I conducted an experiment earlier this week with the AI tool in my internet browser. It is called Copilot. My aims were to test what information AI could find about the local insurance industry and assess the accuracy of that information. I began by posing the following question: What information can you provide about the insurance industry in Jamaica?

Copilot’s response: I can provide some information about insurance in Jamaica. Here are a few key points:

1. Motor Insurance: … General Insurance (name deleted) offers motor insurance coverage in Jamaica. You can get a free motor insurance quote online and personalize your policy1.

2. Travel Insurance: If you are planning a trip to Jamaica, travel insurance is essential. On average, travellers pay around $224 for travel insurance when visiting Jamaica. The cost varies based on factors like age and trip cost.

3. Life Insurance: While I do not have specific details on life insurance companies in Jamaica, there are several providers. You might want to explore the top life insurance companies in the country to find the best coverage.

Remember to research further and consult with local experts to get more specific information to meet your individual needs.

Analysis of response: All devices that connect to the internet, such as computers, smartphones, tablets, printers, and other devices, have a digital IP address. The IP address works like a physical address. When a request for information is sent online, it is sent to another device with a digital IP address. The receiving device processes the information request and then responds by sending information back to the digital address.

Even though Copilot had information indicating that the question originated outside of the United States, its response was framed as though I were a US resident.

When I drilled down to find out more about the companies that offered motor insurance, it failed to differentiate between insurance providers and intermediaries.

Bottom line: Even though developments in AI are occurring at a rapid pace, it seems improbable that the publishers of this newspaper will replace this 27-year-old column with a robot dispensing free information and advice about risks and insurance next month.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com