Reinsurer issues health warning in new report on threat of AI

Swiss Re has warned the global health sector is facing the biggest threat from artificial intelligence as its widespread use brings with it new and as yet unidentified risks.

In a new study the Swiss Re Institute has looked at the current and future risks posed by AI and conclude the health and pharmaceuticals sector is set to be hardest hit by the adverse effects of artificial intelligence (AI) over the next decade.

The study looks at emerging AI risks across ten industries, exploring the probability and severity of various AI-related loss incidents due to data bias, cyberattacks, algorithmic and performance-related risks, among others.

Christoph Nabholz, Chief Research & Sustainability Officer at Swiss Re, said: “While IT services are currently the most affected by AI risks as a pioneer in this area, this is set to change as the use of technology becomes more widespread across all industries, such as in health and mobility. Insurance companies are therefore starting to introduce specific cover for AI performance failures – one of the biggest risks for all industries.”

Swiss Re added as the health industry increasingly uses AI technology to streamline functions such as administration, patient monitoring, diagnosis, and drug development, the risks are also rising and consequences can be serious or even fatal. For instance, flawed or biased AI algorithms could result in misdiagnosis, leading to serious illness or loss of life.

Other industries most at risk of the adverse effects of AI technology over the next eight to ten years are ‘mobility and transport’ and ‘energy and utilities’, which rank second and third respectively. The mobility and transport sector will be highly exposed to AI risk, largely through the use of AI-powered connected and automated driving which poses challenges in highly diverse urban settings. Energy is likely to be another sector to utilise AI extensively, particularly as the ongoing net-zero transition necessitates electrification and the creation of smart grids.

The report added: “Wherever there are opportunities, there are also risks. And artificial intelligence (AI), like any technology, can go wrong. AI may fail against performance benchmarks; it may inadvertently perpetuate discrimination; it could be subject to malicious attack; or it will perhaps cause real world damages.”

It explained: “The potential benefits of artificial intelligence (AI) are immense. One estimate suggests that generative AI, a sub-branch of AI, could alone add “between $2.6 trillion and $ 4.4 trillion annually to the global economy.

“Swiss Re has written extensively on how AI and generative AI will likely be transformative within the insurance industry.

“In one respect, however, AI is no different from other technologies: it can go wrong. AI may fail against performance benchmarks; it may inadvertently perpetuate discrimination; it could be subject to malicious attack; or it will perhaps cause real world damages. Wherever there are opportunities – and the opportunities are huge – there will be risk.”

Pravina Ladva, group chief digital & technology officer at Swiss Re, said: “The benefits of AI are significant for a broad range of industries, but there are also risks that can lead to potential vulnerabilities. Given its role as a shock absorber, the re/insurance industry has an important role to play in addressing AI-related risks and helping build the digital trust needed to harness the full potential of such emerging technologies.”

On what underwriters can do to support businesses across the world, the study added:  “The role of the insurance industry is to support our clients manage AI-related risks, in part with new risk protection products and partly through our existing lines of business. Providing AI risk solutions is a significant opportunity for the industry. Insurance companies are already starting to introduce specific cover for AI performance failures – one of the biggest risks for all industries.”

It continued: “Insurers will approach AI with a mix of new ideas and old exposures. The first specific AI products have already come to market, covering performance risk.

“The scope for expansion of this line is considerable. Cyber risk will overlap AI exposures, potentially give rise to new covers. Insurers will also have to monitor established lines like property or liability for losses caused by AI failure, or IP risks in professional lines.”

The potential benefits of artificial intelligence (AI) are immense. One estimate suggests that generative AI, a sub-branch of AI, could alone add “between $2.6 trillion and $ 4.4 trillion annually to the global economy.’’

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