A trend is developing in the insurance industry with regard to the use of “artificial intelligence” throughout an insurance company’s business operation, including handling claims submitted by policyholders. A recent survey of insurance executives revealed that many of them believe artificial intelligence will revolutionize their companies and the insurance industry at large in the next handful of years.
I suppose I could buy the idea that an insurance company could improve its efficiencies in various areas like underwriting risk or streamlining the process for soliciting, selling and issuing policies and the like. On the other hand, the idea of artificial intelligence (basically a computer program developed by the insurance company or one of its vendors) investigating, evaluating and deciding on claims submitted by policyholders is deeply concerning.
In Oklahoma, an insurance company owes a duty of good faith and fair dealing to its policyholder. That means when a policyholder makes a claim, the insurance company has to act reasonably, fairly and in good faith with regard to the specific facts and circumstances surrounding that policyholder’s claim. If the policyholder’s claim involves, for example, a personal injury suffered in an accident, how can a computer possibly take into account the human elements involved with such an injury and place a fair value on it? What about a claim that requires an evaluation of the truthfulness/credibity of an eyewitness account of an incident? Only a properly trained, experienced, unbiased human being can do these things in good faith.
Why would an insurance company replace the judgment of its adjusters with a computer program’s judgment? Because insurance executives believe doing so saves their companies money. Where does this savings come from? From lower claim payments. Who pays the price for lower claim payments? Policyholders. Is this good faith? The lawsuits that are sure to follow such a move by the insurance industry will tell the tale.