Taking the world by storm: AI, climate ambitions and insurance
The explosive pace of development and adoption of AI solutions has led to high hopes of the technology being used to help solve some of the world’s most pressing problems, including climate change.
Scientists are developing AI solutions to support efforts to meet climate targets and help slow down and reverse environmental impacts. Whilst there is unlikely to be a ‘silver bullet’ solution to climate change, the combined effect of initiatives that use AI to enhance insights about the cause and effects of climate change and to optimize energy consumption may be very significant. However, AI is also extraordinarily energy intensive. A generative AI system is estimated to use around 33 times more energy than simple task-specific software and the consumption of electricity by data centers has dramatically increased in recent years.
For the insurance industry, the impact of climate change is profound, and AI may offer solutions to some of the most pressing challenges for insurers. AI solutions for assessing and pricing risk will be critical to insurers offering products in areas where environmental events present significant risk. For example, AI can be leveraged to better assess the risk of (and even predict) the occurrence of floods or forest fires. Claims automation capabilities powered by AI can also assist insurers to manage large volumes of claims arising from adverse weather events. At a portfolio level, insurers can also use AI to more effectively stress-test their exposure to climate risk and adapt their products and their business models accordingly.
With increasing pressure on governments and businesses to implement measures to mitigate and offset the energy and resource consumption of AI capabilities, insurance companies will need to find a way to balance the benefits of AI with their sustainability objectives in order to ensure that the adoption of this powerful technology does not come at the expense of climate commitments.
Read the full article here. You may also be interested in our article on AI and novel loss scenarios, which can be found here.
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