Why digital trust is key to unlocking AI's full potential in insurance

Swiss Re’s Moses Ojeisekhoba on the potential role AI can play in the insurance industry.

The current public debate about disruptive advances in digital technology – particularly surrounding AI – has served to highlight people's wariness of a world where the line between the physical and virtual is increasingly blurring. It also speaks to the complexity of building digital trust. While digital innovation promises to lift insurers' growth prospects, the industry may find that success in this arena still hinges on old-fashioned human efforts to build faith in this transition.

Mistrust of revolutionary technologies has been a common theme through the ages. There are numerous examples of suspicion and upheaval that accompanied technology-driven transitions in society and economies. As the Industrial Revolution unfolded to start the 19th century, for instance, there was a backlash against new machinery that some feared would replace skilled labour.

We're currently seeing this phenomenon repeated, this time with some of the technologies that drive digital transformation. For example, some of the same people who have breathed life into AI are now saying they have regrets. Global experts have raised red flags about the risks of machine intelligence that rivals that of humans. As generative AI applications proliferate, teachers are despairing about the future of the classroom essay.

While some of these worries may amount to hyperbole, insurance companies should pay close attention to this debate. In an industry where technology and innovation are central to growth, building and maintaining digital trust among customers is an essential ingredient in achieving successful product design and superior user experience. Taking a multidimensional approach to understanding how people perceive trust – and how that trust may be eroded – is of utmost importance.

Digital solutions must appeal to customer values

Although digitalisation may seem ubiquitous in a world where we can do nearly everything online, we still can’t take digital trust for granted. In fact, there may be a fundamental misunderstanding of the real building blocks required to create it.

A recent Swiss Re Institute study found no direct correlation between the sophistication of a country’s digital infrastructure and higher levels of digital trust among its people. The mere presence of digital infrastructure or AI capabilities in a society isn’t sufficient to win people over. Rather, digital trust also demands that we advance the values that really matter to consumers, including a sense of purpose, ease of use, the need for security, and transparency.

When it comes to making digital platforms user-friendly, other recent studies have shown that ease-of-use factors in digital financial services can directly and positively influence trust relationships. This doesn't merely mean having intuitive operating systems – platforms that make terms and conditions easily digestible for people who aren't steeped in industry jargon will also stand out.

Insurers must nurture ‘explainability’

One hurdle that demands the industry’s attention is the perceived opacity of automated decision-making tools, which is likely contributing to anxieties that these could eventually develop beyond human control and perhaps expose us to societal-scale risks.

Perhaps such concerns are unavoidable, given that the complexity of algorithms underpinning AI may make it difficult for consumers to quickly grasp how they work. However, if uncertainty is allowed to persist or is magnified, mistrust may follow. Consequently, some of AI's benefits, such as faster decision-making, quicker processing and lower costs, may go unrealised.

To remedy this, solutions based around the concept of ‘explainable AI’ can be extremely valuable in addressing trust gaps. This means implementing AI-powered systems that lay out in easily decipherable terms how they produce their results and how customer information is used to arrive at fair and ethical decisions.

Nurturing this explainability ensures that people understand how our industry is working diligently to eliminate bias from AI, and it enables stakeholders to make informed decisions while protecting privacy, confidentiality, and security.

If we do, AI will play an increasingly significant role within the insurance industry – boosting efficiency, driving cost-effectiveness, and ultimately setting the stage for new innovative solutions.

Moses Ojeisekhoba is CEO, global clients and solutions at Swiss Re