Toronto, Ontario -- Insurance company spending on artificial intelligence technology has more than doubled this year, a new report has found.
According to a paper from DBRS Morningstar, the average North American insurer's spending on AI technology has reached 20 percent of its IT budget, up from eight percent last year.
For the collision repair industry, the most significant development involves increased spending on AI-powered damage assessment capabilities. Property and casualty insurers are now using AI to assess vehicle damages through digital photographs. AI fraud detection systems are being even being trained on historical fraud data to flag suspicious claims for further investigation.
While collision professionals may dread the prospect of negotiating repair costs with an AI, the new technology may also provide benefits for auto repair facilities. According to the report, AI models can analyze company exposure to catastrophic events in significantly shorter timeframe.
"By synthesizing granular data and improving existing risk models, AI can complement human expertise in underwriting and provide valuable insights for risk selection and pricing," the authors wrote. "This may ultimately help insurers write more policies with consistent pricing for similar risk profiles."
According to Morningstar, the adoption of the new technologies may also bring new risks to insurers. The report noted that flawed AI reasoning in claim rejections could result in class action lawsuits.
"On the other hand, since underwriting decisions have a direct impact on profitability, AI models need to be carefully selected, trained and tested as otherwise mispriced policies could result in very serious reputational and financial implications."
