Urgent industry calls for more AI regulation
Urgent industry calls for more AI regulation | Insurance Business New Zealand
Insurance News
Urgent industry calls for more AI regulation
Huge proportion of insurance CEOs want a “robust regulatory framework”
Insurance News
By
Daniel Wood
The insurance industries in both Australia and New Zealand are grappling with artificial intelligence (AI) technologies and how to use them effectively, safely and compliantly. However, in each country, the approach to AI from the government, so far, is quite different.
Australia was relatively fast out of the blocks. In 2019, the Department of Industry Science and Resources released AI Ethics Principles to guide businesses. The insurance industry was involved, including Insurance Australia Group Limited (IAG), which piloted the eight Principles. The government has invested millions of dollars in “responsible AI” and is considering new legislation that targets higher risk AI.
Is New Zealand lagging behind?
The New Zealand government wasn’t so quick. According to some insurance industry leaders it has offered little in the way of AI guidance. The government published a cabinet paper in July – likely one of its more substantial documents on AI challenges: “Approach to work on Artificial Intelligence.”
The paper, from the office of Judith Collins, the Minister for Science, Innovation and Technology, talked about supporting “increased uptake of AI in New Zealand.”
The paper’s contents – and commentary in local media – suggest that AI-specific regulation is not ruled out but not currently being considered.
“We already have laws that provide some guardrails; further regulatory intervention should only be considered to unlock innovation or address acute risks and use existing mechanisms in preference to developing a standalone AI Act,” says the paper.
Widespread calls for AI regulation
Meanwhile, some insurance industry stakeholders are crying out for more government guidance.
Last month’s New Zealand Underwriting Agencies Council (NZUAC) Expo in Auckland featured an AI-focused panel. The discussion centred on the current and future impact of AI on the insurance industry.
“I think in New Zealand at the moment we’re really not regulated at all around AI,” said Paula Sheppard-Jones (pictured above), CEO, DUAL NZ.
The DUAL leader was a panellist, together with Tim Warren (pictured immediately below), founder of AI software company Ambit and Dan Xu, CEO of AI engineering consultancy, ElementX.
Sheppard-Jones said the Privacy Commissioner has provided “the only substantive regulation at all to work with” and that Collins’ ministry is trying, but it’s not enough.
“We don’t quite know how to operate as businesses in this environment yet,” she said. “We don’t have guidance as to how to do it.”
Sheppard-Jones said AI regulations are important for determining how insurance industry business owners and managers “interact with this technology going forward.”
Most CEOs want “robust” AI regulations
According to a KPMG survey, her view is strongly supported by the majority of the industry’s leaders across the globe.
That report found that insurance CEOs see AI’s ethical issues and the current lack of regulation in the space as its biggest challenges.
“Big things are going to happen – be ready”
Warren pointed to some of the challenges facing New Zealand and the rest of the world when it comes to AI regulations.
“The problem is, this is moving faster than anything that’s ever needed to be regulated before,” he said.
However, Warren said there are encouraging regulatory moves coming out of the United States and the UK. He said both governments have released detailed directives around the likely impacts of AI.
“I was really pessimistic before I saw these [directives], but they’re surprisingly good,” he said. “The main point is understanding what can be done with the technology, not looking to just throw it up the stairs and lock it up.”
He suggested that global AI standards, rather than just national AI policies are needed.
Contracts of Insurance Bill
The New Zealand government is very busy with other insurance-related regulations.
The Contracts of Insurance Bill is expected to become law by the end of the year and will consolidate six different acts relevant to insurance contracts into the one Bill. Among other things, the legislation will add a Duty of Utmost Good Faith to the relationship between insurers and customers.
Then, early in 2025, the Financial Markets Authority (FMA) is introducing an act that sets new standards around how insurers treat consumers. The Financial Markets (Conduct of Institutions) Amendment Act 2022 (the CoFI Act) aims to make sure banks and insurers conduct business according to a fair conduct principle.
Do you think AI needs strong regulations? Please tell us your view below.
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