Trust in AI

As first seen in Insurance Business

Polarisation between AI’s doomsayers and its evangelists may have abated but the technology still promises enormous rewards alongside great risks.

ARAG's Director of Underwriting and incoming CEO, David Haynes, looks at how insurers can reap the benefits without endangering the trust that underpins their business.

Early adoption

Like most companies of our size, ARAG has been exploring the implications of artificial intelligence for our business for some years. We’ve already seen significant dividends from our early investment in AI and we’re truly optimistic about the increasing benefits it is bringing to our policyholders.

The return on our AI investment came much sooner than expected, when tools that we’d been working on helped ARAG companies to avoid much of the disruption that many businesses had to overcome at the start of the pandemic, early in 2020.

Pioneering AI has extended throughout our international group, from partnerships with data centers in Spain and legal-tech labs in the Netherlands, to testing intelligent chatbots in claims reporting and being one of the first German companies to join the Microsoft 365 Copilot Early Access Program, in 2023.

But we’re also conscious of the risks that accompany AI and have a group-wide strategy, currently in its second major iteration, that ensures we don’t lose sight of key pitfalls such as those around ethics, data security and regulatory requirements.

A long time coming

Artificial intelligence may have been around since the 1950s and found its first insurance industry application in the 80s, but it is only the convergence of huge, accessible data sets and the enormous processing power required to analyse them that has put machine learning tools onto our desktops and, more recently, into our pockets.

This is why ARAG has been able to make the most of the opportunities presented by AI. Over the years, we have assembled huge repositories of data from millions of policies and hundreds of thousands of claims, not to mention the broader experience we can often glean from our global group.

The international ARAG Group also brings the other vital component needed to make use of AI to the table, in its strong commitment to and investment in digitalisation.

A foot in two worlds

Our position, bridging the legal and insurance worlds has given us a slightly different perspective on the opportunities that AI offers, as well as the potential challenges.

Most of the use cases from which insurers are seeing the greatest benefits from AI are common across the industry and often beyond. From analysing risks and pricing policies to fraud detection and customer service, the insurance sector has seen a rapid acceleration from innovation to broader adoption.

While some of these applications are obviously relevant to law firms too, excitement around AI in the legal world has focused much more on its use to assist legal research, review documents and draft contracts.

However, one thing that the legal and insurance worlds share is that each depends on a high level of trust. While both professions can sometimes be the target of suspicion and cynicism, it is the degree of trust that clients have to place in us that raises expectations and exacerbates any negative experience.

Insurance and the law are also somewhat impenetrable to the layperson. Both are complex fields, each with its own language that can often be incomprehensible to our customers. This only increases the need for clients to trust us but can also heighten their scepticism.

The trust premium

The value of trust may be hard to quantify, but it’s clearly something for which customers are prepared to pay a premium. One only has to think about the enduring brands, not just in insurance but across every market, and the loyalty they inspire.

The importance of trust is underscored by its fragility. It can take years to establish but be broken in a moment. Worse still, the trust that one business has taken years to cement can sometimes be undermined by others in its market.
This is why our excitement to seize the fruits that AI has to offer and our fear of falling behind its incredible pace of change must be tempered with caution.

“Move fast and break things” may be a great maxim for a tech start-up that has yet to establish a reservoir of trust to breach, but businesses that are built on trust jeopardise it at their peril.
As always, we’re primarily driven by the ARAG’s founding mission to extend access to justice as widely possible. AI is already proving to be a powerful tool in helping us to do that, but it won’t be at the expense of the trust that we have taken so long to build.