The Impact of Artificial Intelligence on the Insurance Sector: Pérez-Llorca/IE Analysis

Digital transformation is revolutionising all sectors, and the insurance sector is no exception. In this context, Artificial Intelligence (AI) has become a key driver for innovation and efficiency. With the aim of exploring the implications of this technology in the insurance sector, the Pérez-Llorca/IE Chair organised a conference that brought together leading industry figures, including experts from Microsoft, Sanitas and Axa Spain. This event focused not only on the opportunities offered by AI, but also on the legal and regulatory challenges that its adoption entails. Below are the main points discussed during the day, which underline the importance of a holistic approach to navigating this new landscape.

The day, organised by Pérez-Llorca and IE Law School, brought together leading experts from Microsoft, Sanitas and Axa Spain to explore how the adoption of emerging technologies and AI-based models is transforming the insurance sector. They also addressed the new legal challenges and regulatory innovations that are essential to understand the practical implications of this technological revolution.

The event was opened by Rafael Fernández, who highlighted the need to analyse from a legal and practical perspective how legislators and entities in the insurance sector are adapting to the irruption of Artificial Intelligence in 2023. David González Gallardo, head of the Insurance Unit at Microsoft, was the first speaker and stressed the importance of technological adoption in this sector. He explained that Artificial Intelligence is revolutionising the policyholder experience by facilitating more natural interactions and empowering insurance employees and agents. In addition, he emphasised that AI optimises risk management and transforms key processes in the cloud, allowing companies to launch new products with greater agility. ‘65% of use cases in the insurance industry are focused on claims processing and customer service,’ he said.

Raúl Rubio and Araceli Moyá then discussed the regulatory challenges facing the industry. Both highlighted that the intangibles associated with Artificial Intelligence present complex challenges in their qualification. They agreed that while the regulatory framework may evolve, governance and compliance must remain key pillars. Moyá stressed the importance of understanding regulation and promoting sustainable governance: ‘Although AI is not a new concept, its integration with new European regulation could slow down internal processes, but it should not slow down innovation. The challenge will be to manage the legal uncertainty that may arise in the initial stages’. Rubio emphasised the need to establish ethics committees to ensure transparency in the face of different scenarios, warning that ‘the biggest risk for organisations in the coming years will be reputational’.

In the next panel, Rodrigo Fuentes Gómez highlighted the importance of the human factor in insurers, indicating that the real challenge lies in extending the benefits of digitalisation to all teams in the organisation. ‘The objective is to integrate technology into the business culture with a structured plan that is not limited to the technical team,’ he said.
Felipe Vázquez agreed, pointing out that the responsibility for governance cannot fall solely on the control departments: ‘It is essential to build a robust control culture at all levels that ensures robustness and compliance without compromising operational agility’. In this context, Fuentes Gómez highlighted the relevance of having key roles such as the Chief Data Officer and the Data Protection Officer, who can implement functional processes that do not hinder the operation of the company.

Finally, Joaquín Ruiz Echauri closed the session by addressing the impact of regulation on Artificial Intelligence. He highlighted the European Commission’ s White Paper on AI and the proposal for a Directive adapting the rules on non-contractual civil liability to this technology. Ruiz Echauri explained that the Directive focuses on the people behind the technology, rather than holding AI systems directly liable.

He introduced the concept of ‘high-risk AI’, which includes systems used as safety components of a product, which are subject to European law. This could lead to disputes in which the creators of these AIs would have to prove that they took all necessary measures to prevent harm, even if the AI was used for a different purpose than intended. This new landscape poses significant challenges for insurers, which will need to clearly define the limits and conditions of policies covering these risks.

‘It is crucial that companies prepare for these regulatory changes, as they will not only affect risk management, but also the way insurance products are designed and offered, implying a profound transformation in the sector,’ Ruiz Echauri concluded.

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