Creating Ethics Guidelines for Artificial Intelligence (AI) and Big Data Analytics: The Case of the European Consumer Insurance Market

Abstract

The European Union (EU) has a strong reputation and track record for being proactive in the development of guidelines and regulations for the ethical use of AI generally. In this paper, we discuss the development of an AI and ethical framework by the European Insurance and Occupational Pensions Authority (EIOPA), for the European insurance market. EIOPA’s earlier report on big data analytics (EIOPA 2019) provided an important foundation to analyse and evaluate the complex range of issues and ethical problems associated with the wave of new AI technologies being deployed in insurance such as behavioural insurance, parametric products, novel pricing and risk assessment algorithms, e-service and claims management, which exploit big data and machine learning. In this paper we present an overview of the use of AI in insurance based on the full range of insurance applications throughout the insurance value chain. A general discussion of ethics and AI is illustrated with the specific use-case of insurance, and a new hierarchical model is presented that describes insurance as a complex system that can be analysed by taking a layered, multi-level approach, on which ethical issues can be mapped directly to specific level(s).

Keywords: insurance, ethics, Artificial Intelligence (AI), big data, machine learning, ethical framework

JEL Classification: L84, C45, O32, O38, G22