The expectations of insurance customers have increased, necessitating:

• Personalized, continuous and dynamic risk prevention
• Instant, personalized and seamless damage handling

Consequently, insurance companies must enable proactive, personalized, seamless risk management. Proactive and seamless risk management requires a paradigm shift from ‘repair & replace’ to ‘predict and prevent’ and the ability to analyse continuous individual-level data.

But personalized risk management conflicts with:

• the increased need to reduce costs due to increased competition
• the increased expectations and obligations regarding data privacy and protection

To reduce operational costs, many insurance companies started digitizing workflows and using AI to automate tasks, for example: automated risk assessments for faster and more accurate underwriting, automated fraud detection, automated customer service via chatbots and automated claim management. However, automating insurance tasks must allow for human agency and explanations of automated decisions that are understandable to insurance employees and customers (cf. GDPR).

To deliver personalized products and services, insurance companies started partnerships with companies that provide tools for tracking a customer’s continuous risk (e.g. partnership with Fitbit). Using AI to analyze these continuous individual data raises significant data privacy and data protection challenges.

Lack of human agency, explainability, fairness, and respect for data privacy result in lack of trust and, most often, a failure to adopt the AI solution.

Trustworthy AI supports hyper-personalized insurance decisions that are fair, transparent and explainable by design. Trustworthy AI is ethical (fair, non-discriminating), lawful, and robust (Ethics Guidelines for Trustworthy AI, 2019). It enables fair and consistent decisions that are explainable and justifiable to all stakeholders.

The European Insurance and Occupational Pensions Authority published a report on trustworthy AI for insurance companies (2021): ‘’Artificial intelligence governance principles: towards ethical and trustworthy artificial intelligence in the European insurance sector.’’