AI Ethics: Balancing Innovation and Responsibility

As AI becomes more embedded in insurance operations, brokers are in a unique position to ensure the responsible use of AI.

Recently Berkley Insurance Australia hosted a Webinar on this subject. The following is a summary of some of the key points covered in the Webinar.

1. Data Privacy and Security

AI systems often process large volumes of personal data. Ensuring that this data is handled securely and in compliance with privacy and data protection laws and regulations is critical. Brokers should be aware of how client data is being used and stored, and ensure transparency in those practices. It’s essential to conduct due diligence on AI vendors, update privacy policies to reflect AI usage, and avoid entering sensitive information into public AI tools. Robust data protection measures and clear protocols for responding to data breaches are critical for maintaining trust and meeting legal obligations.

2. Bias and Fairness

AI can unintentionally replicate biases found in its training data. For example, if a claims algorithm is trained on data that favours certain demographics, it may produce biased outcomes.

To mitigate this, brokers should:

• Ask vendors about the diversity of their training data.
• Monitor AI outputs for signs of bias.
• Advocate for fairness checks in the tools they use.

Implementing fairness checks, using diverse data sets, and continuous monitoring are key strategies to promote equitable outcomes for all clients.

3. Transparency and Accountability

One of the biggest challenges with AI is its “black box” nature decisions are made by complex algorithms that aren’t always easy to explain. This can be problematic when clients ask for clarity or when errors occur.

Brokers should look for AI tools that offer explainable outputs and ensure there’s a clear accountability framework in place. Human oversight remains essential, especially for decisions that impact clients directly.

4. Ethical Development

Ethics should be built into AI systems from the start. That means programming them to make decisions aligned with societal values and ensuring people are involved throughout the process.

Brokers can play a role by:

• Choosing tools developed with ethical standards in mind.
• Staying informed about how AI systems are built and maintained.
• Raising concerns when something doesn’t feel right.

5. Misinformation and Deepfakes

AI-generated content, including deepfakes, is becoming more sophisticated. These tools can be used to spread misinformation and erode trust.

While this issue may seem more relevant to media, it has implications for insurance too especially in claims, underwriting, and client communications. Brokers should be aware of the risks and consider tools that help detect and prevent misinformation.

AI as a tool to enhance, not replace, Broker Expertise

For brokers, the lesson is clear: ethical AI isn’t just a tech issue – it’s a business issue. Staying informed and asking the right questions can help avoid problems down the line. AI should be seen as a powerful assistant that can automate routine tasks, analyse complex data and improve efficiencies. It is not a substitute for professional judgement, relationship building and the understanding that brokers bring to their clients. Encouraging the use of AI in insurance can free up time for higher value activities, such as personalised service.

Some suggested Best Practices for Brokers

• Use tools trained on diverse data sets.
• Ask vendors about fairness and transparency checks.
• Understand the differences between open and closed AI systems
• Establish internal guidelines for AI use.
• Anonymise personal data where possible to reduce data protection risks.
• Establish clear protocols for detecting, reporting and responding to data breaches.
• Maintain human oversight for AI driven decisions.
• Educate teams on AI risks and responsibilities.

These steps help ensure that AI supports professional judgment rather than replacing it and that client trust remains intact.

Watch the Webinar On-Demand

The full webinar is available to watch online at: berkleyinaus.com.au/webinars

Important Notice

Berkley Insurance Company (limited company incorporated in Delaware, USA) ABN 53 126 559 706 t/as Berkley Insurance Australia is an APRA authorised general insurer. Information provided is general only, intended for brokers and has been prepared without taking into account any person’s particular objectives, financial situation or needs. Insurance cover is subject to terms, conditions, limits, and exclusions. When making a decision to buy or continue to hold a product, you should review the relevant policy documents.