AI regulation in Asia and why there’s no “good answer” just yet
AI regulation in Asia and why there’s no “good answer” just yet | Insurance Business Asia
Technology
AI regulation in Asia and why there’s no “good answer” just yet
“It needs to be a talking point for smarter people than me to figure out”
Technology
By
Terry Gangcuangco
Following its breakthrough year in 2023, many are expecting AI proliferation to continue ramping up this year as industries are realising just how far-reaching its uses can be. However, this continued proliferation has also meant that there is a rising need for regulations to protect the human workforce from its wide range of applications and efficiency.
It is a growing issue that is in the back of everyone’s minds, and in conversation with Insurance Business Asia, Clearwater Analytics APAC insurance director Tom Marlatt discussed why.
“I think it’s on everyone’s mind, and partly why it’s on everyone’s mind is we don’t have a good answer. It’s really, really, challenging,” Marlatt said. “If you think about the impact of going from a world without the internet to a world with the Internet, could we back then have truly understood the depth, and the breadth of how the internet would change things to be able to put adequate guardrails around that transition?”
Marlatt believes that compared to the internet transition, the one being presented by gen AI today is much bigger in comparison, which in turn necessitates more challenging regulations. Regardless of what those might entail, he believes that guardrails being developed would need to strike a good balance between protecting consumers and industries and not stifling creative solutions.
“So, how do we get that balance? I don’t know. I don’t have a great answer,” he said. “But I believe that whatever guardrails they put in place, we’ll have to consider those two things, and come to a good balance of those.”
Marlatt also noted that as a technology company, Clearwater Analytics needs to be at the forefront when it comes to new developments and changes in the space. Even with this consideration, he said that they are “still trying to wrap our heads around AI.”
“I would consider us to be, in terms of fast movers and fast adoption, at the forefront of the gen AI adoption,” he said. “Even then, we are still trying to figure out what are the guardrails that we need to put in place for ourselves to protect our clients. I would imagine that it will take time before insurance companies get to a position where they really have to consider that. But certainly, it needs to be a talking point for smarter people than me to figure out.”
Adopting the C-suite mindset
A survey from the company that delved into the mindset among insurance decision-makers in Hong Kong and Singapore revealed that C-suite executives are much more comfortable in adopting AI technologies, versus insurance companies themselves that seem to prefer older, proven tech like the cloud.
Marlatt said that this trend could be easily explained in the context of what insurance is and how the industry does its business.
“For the most part, I think we could generalise the insurance industry as being slightly behind the curve in terms of technology adoption as an industry and, and a conservative industry at that. They’re very conservative with their guidelines and very, very careful with their company to make sure that they can take care of their clients,” Marlatt said.
“The migration right now, for the conservative mindset of insurance companies, I believe, is the cloud. Cloud has been tested, it’s proven,” he said. “From the insurance mindset, we’re trying to move to a cloud-based world where we can gain some efficiencies, but not put ourselves in a situation where there’s a lot of guardrails.”
And these guardrails would also be very clear, meaning that they’ve been tried and tested across many other industries globally. Marlatt noted that as an already-established technology, the cloud has experienced people and important infrastructure in place that can help insurers in their transformation journey, making it a much more attractive prospect for those looking to digitise.
“There’s a cost to adoption as well,” he said. “The cost to adoption is really well known with cloud, you can basically plug in exactly what you want to do, what you want to migrate to the cloud, and you can come [up with] a dollar figure fairly quickly on what your cost will be and the timetable in which it will be completed. That level of certainty around the transformation cost is really appealing to insurance companies because they’re not going with an open budget into the transformation.
“Alternatively, with gen AI, who knows what that transformative process might cost, what it might look like, and what you’re actually transforming into. That’s the insurance mindset,” he said.
C-suites, on the other hand, are much more forward-thinking in their approach, Marlatt says, which explains why there is a discrepancy in AI adoption for firms in the region.
“We’re not an insurance company, but we have a very forward-thinking CEO as well, who we love and respect, and his mindset has been, we need to be fast movers. If we don’t adapt quickly, then we die. And so, I think that a lot of C-suite are looking at the revolutionary changes that gen AI might have and want to get ahead or be the first adopters. It could be this aspect that shapes an entire market in terms of industry leaders for insurance companies,” he said.
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