The Double-Edged Sword of AI in Insurance Underwriting
The insurance industry is witnessing a significant transformation with the integration of Artificial Intelligence (AI) in underwriting processes. While AI streamlines operations, it also exposes vulnerabilities. Kate Della Mora, CEO of CFC Underwriting Canada, highlights this paradox, stating, “We’re using the same AI to solve the problem that’s creating the risk.” AI is not just a tool but a mirror reflecting the industry’s reliance on outdated systems.
In data-intensive sectors like healthcare and cyber insurance, AI optimizes and undermines underwriting conversations. According to Capgemini, 62% of insurance executives believe AI enhances underwriting and reduces fraud, yet only 43% of underwriters trust AI outputs. This discrepancy reveals a deeper issue: technological adoption is outpacing organizational confidence.
The Need for AI Governance
Della Mora advocates for AI governance that matches the tool’s complexity. She emphasizes the importance of tailored regulation, internal accountability, transparency, and compliance. Explaining AI models to regulators and clients is crucial, especially when handling sensitive data. “We want to continue to enhance the trust within the insurance industry,” she said.
The challenge is particularly significant in healthcare, where AI processes confidential information. Della Mora questions whether algorithms are equipped to handle such responsibility, noting, “These claims often contain highly confidential information. Should we be entrusting such sensitive information to machine learning systems?”
Regulating AI with Precision
As regulators respond, Della Mora points to Australia’s insurance-specific AI regulation as a potential model for Canada. She argues that sector-agnostic frameworks are insufficient due to the varying ways industries use AI. “The processes and the way that different industries and different companies are using AI is so different. Regulatory models may have to be tailored to suit specific industries based on how AI is utilized and the associated risks,” she explained.
Bridging the Tech Gap
Della Mora notes a widening tech gap between early adopters and firms using outdated systems. She suggests adopting plug-and-play AI tools as a first step, even if imperfect. “You don’t necessarily need to build from the ground up. They’re maybe not perfect but it can kind of help get you to where you need to be,” she advised.
The Future of Insurance
The winning model, according to Della Mora, involves putting client-facing roles in human hands and using technology in the back office to drive smarter decisions. “Staffing, talent, and culture” will determine which insurers remain relevant. She sees AI’s greatest value in custom-built solutions for niche risks or real-time fraud detection.
Collaboration as a Competitive Edge
Della Mora believes the greater risk is not runaway technology but regulatory paralysis. Insurers must engage with regulators early and often. “If you can collaborate [with regulators] to make sure that everybody’s on the same page, you’re not going to fall behind,” she said.
The future of insurance lies with firms that balance speed with responsibility and build trust into every algorithm. The Women in Insurance Canada event will address these challenges, focusing on turning complexity into clarity and disruption into opportunity.
