2026-11-09 · Source: Insurance News Australia
Summary in 3 Points • AI could improve underwriting and pricing, but may make some risks harder or more expensive to insure. • Ms Smith highlighted the need for board governance to keep pace with AI innovation and its risks. • New technologies amplify interconnected risks, necessitating strong governance and risk assessment. --- Suzanne Smith from the Australian Prudential Regulation Authority discussed the implications of AI in underwriting at the Insurance Council of Australia Annual Conference. While AI has the potential to enhance risk assessment and pricing, it may also lead to greater segmentation, making certain risks more challenging or costly to insure, which could affect the accessibility and affordability of insurance pools. Smith emphasised the importance of governance in the face of AI innovation, noting that the technology can introduce significant operational risks and dependencies on third-party providers. She warned that without robust governance and risk assessment, insurers could face unforeseen challenges that could derail their operations, highlighting the need for clear accountability and understanding of AI's material risks and outcomes. AI's potential to improve underwriting may lead to greater segmentation, impacting the accessibility and affordability of insurance pools.
AI's potential to improve underwriting may lead to greater segmentation, impacting the accessibility and affordability of insurance pools.