Discussions:101,499. |. Messages:1,352,505. |. Members:85,225


Celent Offers Risk Management Playbook for Generative AI in Life Insurance

Insurance Forums Staff

Life insurers that want to leverage Generative AI in their enterprise can’t wait for regulators to implement guardrails that reduce risk. They must make offensive and defensive game plans when it comes to governance and risk management.

That’s the view of Celent, a global research and advisory firm focused on technology for financial institutions. Its newly released Generative AI – Mitigating Risk to Realize Success report, focused on opportunity, risk, and risk mitigation strategies for North American life insurers, is the second in a series of generative AI and other Large Language Model (LLM) reports.

This report continues Celent’s examination of the growth in the launch of large language models like Open AI’s ChatGPT; regulatory reaction, opportunity, and primary risk areas of generative AI; and what insurers should consider to mitigate risk for a successful generative AI journey.

Artificial intelligence is revolutionizing the way Americans live and work, and it will profoundly reshape the world by transforming jobs and fostering new industries—while disrupting insurance operations and technology strategies along the way. Many insurers have already implemented some form of AI in their organizations. Those who did may have introduced AI policy and governance guidelines as well.

However, the launch of ChatGPT introduced the world to the extensive possibilities of generative AI and, along with the possibilities the introduction of generative AI adds several new elements of risk to the AI mix that insurers need to assess policy for if they haven’t already.

Regulatory response may take well beyond 2023 to arrive. That means insurers must develop a tactical playbook to mitigate risk when implementing generative AI (or having third party platform and service providers implementing it). Understanding the risk and having an appropriate mitigation strategy will be a critical step toward the future of all things AI. Carriers should responsively, but actively, pursue innovation while also rigorously protecting themselves from external threats.

Playing Offense – Harnessing Opportunity

  • Improve Customer and Employee Experiences: Deliver productivity and intelligence tools.
  • Innovation and Expansion: Leverage AI/ML/generative AI to continuously innovate with better data analytics and product/service enhancements.
  • Operational Improvements: Increase operational efficiency and improve decision-making processes using AI’s predictive and analytical capabilities.
  • Security Advancements: Use AI to bolster cybersecurity efforts, detecting and preventing threats before they strike.

Playing Defense – Fortifying Against Emerging Threats

  • Bias Mitigation: Implement checks and measures to prevent AI-induced biases in customer interactions.
  • Hallucination Safeguards: Regular monitoring and validation of AI outputs to prevent “hallucinations” or false patterns.
  • Threat Resistance: Strengthen defenses against external malicious actors and cyber threats.
  • Regulatory Preparedness: Ensure readiness for any regulatory scrutiny or changes.
  • IP Protection: Maintain robust intellectual property protection policies and procedures.

For any industry, adoption of augmented intelligence tools requires mapping unchartered waters and extensive collaboration across enterprise stakeholders and regulators. LLMs are rapidly evolving and life insurers looking to use them are likely still exploring the best ways to deploy, mitigate risk exposure, and regulate the technology. As a result, Celent provides deep insight into the risks that are brought about by the use of these tools and risk mitigation options life insurers who are currently using or contemplating the use of generative AI tools should consider.

Boston-based Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies.



Leave a Comment