Software company Hyperexponential said that the findings show that employers in the insurance sector should take steps to alleviate the fears of employees about technological change.
There was a dramatic increase in 2023 in insurance investment in AI, which has been touted as a $50 billion financial opportunity for the sector.
"Far from being replaced, actuaries and underwriters can add significantly more value by embracing and leveraging AI, allowing them to analyze complex data, communicate more effectively and build new tools that would have been impossible five years ago," Amrit Santhirasenan, the chief executive of Hyperexponential, said.
The survey was conducted among 245 underwriters in the U.K. and U.S. on behalf of the company by research firm Coleman Parkes.
The use of AI by insurance companies is not new, and big data is increasingly being used by underwriters to calculate the risk that policyholders will have to claim.
But many factors are considered in decisions by pricing algorithms, and they are often opaque, which has caused alarm among consumer groups.
An investigation by a U.K. national newspaper found in 2018 that insurers were likely to charge a customer named "Mohammed" more than they would for one called "John," despite the risks being identical.
Admiral Insurance floated a plan in 2016 to use text-based Facebook posts of clients to help decide prices. The company said in a rare disclosure that poor grammar on an application form could be an indicator of whether a consumer was a good driver.
Although the Financial Conduct Authority has largely taken a hands-off approach so far, the City watchdog warned the industry in 2022 that it needed to ensure proper internal accountability for complicated pricing algorithms to guard against the risk of "ethical harm".
Insurers have recently been investing heavily in the next phase of the technology known as generative AI — which goes beyond simple number-crunching.
A report by consultancy Source Advisors in March suggested that U.S. companies in the finance and insurance sectors have ramped up their research and development expenditure to $20.9 billion last year, from $12.3 billion.
Research by private equity company Bain & Co. Inc. in April suggested that insurers could earn 20% more in revenue and cut their costs by up to 15% by adopting newer forms of AI — the equivalent of around $50 billion a year.
--Editing by Joe Millis.
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