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Transparency and insurance professionals: a study of Swedish insurance practice attitudes and future development

Author

Listed:
  • Jacob Dexe

    (RISE Research Institutes of Sweden)

  • Ulrik Franke

    (RISE Research Institutes of Sweden)

  • Alexander Rad

    (RISE Research Institutes of Sweden)

Abstract

The insurance industry is being challenged by increased adoption of automated decision-making. AI advances could conceivably automate everything: marketing, customer service, underwriting and claims management alike. However, such automation challenges consumer trust, as there is considerable public and scholarly debate over the ‘black box’ character of many algorithms. Insurance being a business of trust, this suggests a dilemma. One suggested solution involves adopting algorithms in a transparent manner. This article reports a study of how Swedish insurers deal with this dilemma, based on (i) eight interviews with insurance professionals representing four companies with a joint market share of 45–50% of the Swedish property insurance market and (ii) a questionnaire answered by 71 professionals in a Swedish insurance company. The results show that while transparency is seen as potentially valuable, most Swedish insurers do not use it to gain a competitive advantage or identify clear limits to transparency and are not using AI extensively.

Suggested Citation

  • Jacob Dexe & Ulrik Franke & Alexander Rad, 2021. "Transparency and insurance professionals: a study of Swedish insurance practice attitudes and future development," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(4), pages 547-572, October.
    • Handle: RePEc:pal:gpprii:v:46:y:2021:i:4:d:10.1057_s41288-021-00207-9
    DOI: 10.1057/s41288-021-00207-9
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    References listed on IDEAS

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    Cited by:

    1. Gupta, Somya & Ghardallou, Wafa & Pandey, Dharen Kumar & Sahu, Ganesh P., 2022. "Artificial intelligence adoption in the insurance industry: Evidence using the technology–organization–environment framework," Research in International Business and Finance, Elsevier, vol. 63(C).
    2. Jacob Dexe & Ulrik Franke & Kasia Söderlund & Niels Berkel & Rikke Hagensby Jensen & Nea Lepinkäinen & Juho Vaiste, 2022. "Explaining automated decision-making: a multinational study of the GDPR right to meaningful information," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(3), pages 669-697, July.
    3. Willem Standaert & Steve Muylle, 2022. "Framework for open insurance strategy: insights from a European study," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(3), pages 643-668, July.

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