A new report from CSIRO, Australia’s national science agency, and the Insurance Council of Australia (ICA) reveals how artificial intelligence (AI) could help insurers better manage risks, improve customer experiences, and strengthen industry resilience.
Titled AI for Better Insurance: Enhancing Customer Outcomes amid Industry Challenges, the report explores how AI can help insurers tackle rising operational costs, natural disaster threats, and changing customer expectations.
Dr Alexandra Bratanova, CSIRO project lead, said the timing of the research was critical.
“The insurance sector is facing significant pressures from climate change, rising costs, and shifting customer demands.”
Currently, around one in three Australian homes – 5.6 million properties – face bushfire risk, while one in 12 properties – 1.36 million homes – are exposed to flooding. Rising inflation, labour shortages, and higher reinsurance costs have pushed up insurance premiums and claims, placing pressure on households, especially those in high-risk areas.
Insurance claims linked to catastrophic events have jumped nearly 50 per cent in the past five years and are expected to rise by 5 per cent annually until 2050.
Dr Bratanova added, “Our research identified seven key areas to guide the responsible adoption of AI in Australia’s insurance sector, with the potential to improve affordability and customer service, and strengthen industry resilience.”
She further noted that AI could streamline operations and create more personalised customer experiences, potentially making insurance more affordable and accessible.
“However, this transformation needs to be managed responsibly, with appropriate governance frameworks and guardrails to protect consumer privacy and ensure equitable outcomes.”
The report highlights five priority AI use cases for Australian insurers: automated claims processing, fraud detection, enhanced underwriting, natural disaster impact prediction, and operational compliance.
ICA CEO Andrew Hall said the research offered a roadmap for the industry as it embraces AI: “This report provides a practical roadmap for insurers to harness AI responsibly while keeping customer outcomes front and centre,”
Hall added, “By implementing AI solutions effectively, we can improve affordability and enhance our natural disaster response and recovery – ultimately helping more Australians access the financial protection they need.”
“The industry is committed to prioritising safe adoption by addressing privacy and safety concerns, and AI system biases so that these technologies serve all Australians fairly.”
The report also outlines seven key areas for advancing AI adoption in insurance: delivering better insurance through AI, strengthening governance, fostering collaboration, adopting AI strategically, building AI skills, becoming a trusted partner, and innovating products to address emerging challenges.
The research was conducted with the ICA AI Working Group and draws on international frameworks and best practices for responsible AI adoption.
Support our Journalism
No-nonsense journalism. No paywalls. Whether you’re in Australia, the UK, Canada, the USA, or India, you can support The Australia Today by taking a paid subscription via Patreon or donating via PayPal — and help keep honest, fearless journalism alive.
