Central Bank to watch AI use by insurers
A top regulator has told the insurance industry that the Central Bank will aim to develop a deeper understanding of the use of artificial-intelligence (AI) systems in the sector.
Director Seána Cunningham told the European Insurance Forum that the insurance industry had “pioneered” the use of data and statistics to make decisions on risk.
She warned, however, that managing new data and technologies, particularly involving the use of generative AI, would require firms to “consider carefully their ethical and responsible use – including the governance and controls required to oversee these technologies effectively”.
that the regulator would be assessing whether firms had the necessary governance and risk-management measures in place to harness such innovation responsibly and well.
“If the insurance sector is to continue to be resilient and to maintain trust, then innovation needs to be done in a way that is both responsible and ethical,” she stated.
Resilience
Cunningham also told the industry that, although it had shown itself to be resilient in the face of economic and financial volatility, there was “no room for complacency”.
“Rising geopolitical tensions and economic divisions pose significant challenges for insurers, which serve to underscore the continued importance of prudent risk management and resilience across the financial system, and at an individual firm level, the maintenance of sufficient financial resources to withstand plausible but severe stresses,” she stated.
The Central Bank director also told the event that the regulator was “proactively engaging” with a drive to simplify regulation, at home and in Europe.
She added, however, that there was a “careful and critical” balance to be struck.
“Simpler standards cannot mean lower standards, and simpler standards will still need to deliver their intended outcomes,” Cunningham said.