Ferma welcomes EC plans for AI ethics but concerned about use by insurers

Ferma has welcomed the fact that proposed EC guidelines on artificial intelligence (AI) ethics will be voluntary, but raised concerns that the use of such technology in the underwriting process could put buyers at a disadvantage and mean some might not be able to obtain cover. Ferma is pleased by the “overall approach” to create European guidelines on AI ethics set out in draft guidelines prepared by the EC, in a move that will usher in the first such regime anywhere in the world. In response to a consultation on the draft guidelines, Ferma said it particularly appreciates the fact that the proposed guidelines are voluntary and built on an existing set of fundamental values, rights and principles. Ferma stressed that it see the draft as a “starting point to efficiently manage the ethical challenges of AI”. It also called for clarity on the definition of AI, to ensure its capabilities are not be under or overestimated. The federation said the development and application of AI has growing implications for risk managers. Risk professionals are likely to find AI an increasingly important tool, especially for assessing risk in very large organisations. They will also have to manage risks associated with the technology, as well as consider its ethical use in commercial and industrial operations, Ferma pointed out. Ferma told the EC that it, and its members, remain both vigilant and impacted by AI ethics. “Vigilant as we see the development of ethical rules as the opportunity to ensure there is accountability in the sphere of AI. Impacted, because we expect the professional practice of risk management to play a fundamental role in the implementation of AI,” said the federation in its response. It noted that risk managers will have to take the lead on AI topics and analyse all the risks arising from its use within organisations. Ferma said it supports the view that risk managers are best placed to analyse the risks related to AI, relying on holistic risk management methodology like ERM. But Ferma also raised fears over the ethical use of AI in the underwriting process, and its potential to restrict the insurability of organisations. Ferma is concerned that if AI is deployed in underwriting, insurers will know considerably more than the insurance buyer about how the technology is integrated into the process. The federation said this could place insurance buyers at a disadvantage. “This asymmetry of information could potentially affect the ability of organisations to purchase insurance and consequently impact their business,” it said. In response to the EC’s consultancy, the European insurance and reinsurance federation Insurance Europe said it is “fully aligned” with the proposed ethical approach put forward, based on existing AI principles. It welcomed the EC’s acknowledgement that Europe already has regulation in place that applies to AI. Insurance Europe stressed: “The insurance industry is a highly regulated and supervised sector at national and European level and, consequently, we believe that a responsible and trustworthy [use of] AI is already ensured in our industry. Moreover, the insurance sector is very experienced in using data and new technologies in a responsible and secure manner.” “Therefore, we recommend that the existing regulatory framework is duly considered when developing the use cases related to insurance premiums,” it added in a response that might well concern Ferma. Insurance Europe also argued it is crucial to ensure that any rules relating to AI design, development and deployment are future-proof and innovation-friendly, allowing European companies to be global competitors. Finally, Insurance Europe said it would welcome the opportunity to further comment on the final draft guidelines, because the initial period was too short. Ferma president Jo Willaert said there needs to be public trust in AI, or it will cancel out advantages the technology can give organisations. “The professional risk manager can, therefore, play a fundamental role in the implementation of AI through a diligent assessment of the risks, including the ethical dimensions,” he said. Philippe Cotelle, Ferma board member with responsibility for digital transformation, said the federation sees the development of ethical rules as an opportunity to ensure there is accountability in the sphere of AI. “We expect the professional practice of risk management to play a fundamental role in the implementation of AI to ensure that organisations conduct a diligent assessment of all risks facing an organisation using AI, including the ethical dimension, through a holistic risk management methodology,” he said.