Artificial Intelligence And Underwriting Practices: Navigating Legal And Ethical Boundaries

Ganga S S, The National University of Advanced Legal Studies, Kochi

ABSTRACT

Artificial intelligence (AI) is transforming underwriting practices in the insurance industry, raising important legal and ethical considerations. This paper examines the challenges around transparency, explainability, and accountability of AI-driven automated underwriting. It reviews relevant regulations such as GDPR's "right to explanation" and emerging frameworks like the EU's AI Act which categorize insurance AI as high-risk. Key principles of fairness, non- discrimination, and consumer protection are discussed. The paper explores various strategies to address these concerns, including explainable AI techniques, enhanced data governance, testing for bias, and human oversight mechanisms. It analyses the regulatory landscape across different jurisdictions like the US, Europe, and India. While regulations are still evolving, the paper emphasizes insurers’ responsibility to ensure responsible AI underwriting. It advocates collaborative efforts between insurers, regulators, and experts to develop industry standards and pragmatic regulations that balance innovation and consumer rights. The paper concludes that careful integration of AI in underwriting necessitates transparency, accountability, and proactive multi- stakeholder engagement to realize benefits while safeguarding interests.