“AI in insurance industry: applications, risks, and legal considerations”
(article by M. Katsioti, and X. Kretsovali, Associates published on Lexology, May 6, 2025)
AI in Insurance: Transforming Operations with Innovation, Regulation, and Trust
Artificial Intelligence (AI) is rapidly reshaping the insurance industry. Over the past three years, it has evolved from a buzzword into a powerful operational force—80% of insurers now use AI to automate processes, assess risk, detect fraud, and personalize customer experiences.
AI-driven tools are streamlining claims handling, analyzing massive datasets for better decision-making, and enhancing customer interactions via 24/7 virtual assistants. In Greece, insurers like Groupama, ERGO Hellas, and Eurolife FFH are leading the charge, launching AI-based services such as chatbots and digital policy purchases, including for niche products like pet insurance.
⚖️ But with opportunity comes responsibility.
As AI adoption grows, so do regulatory and ethical obligations. Insurers must now navigate a multi-layered compliance environment that includes:
- Insurance Distribution Directive (IDD): Applies to AI-driven product distribution just as it does to human agents
- Solvency II Directive: Requires AI to be integrated into insurers’ governance and risk management frameworks
- EU AI Act: Imposes strict governance, transparency, and oversight requirements, especially for high-risk AI systems used in pricing and underwriting
- DORA (Regulation 2022/2554): Ensures digital resilience against cyber threats, covering AI used in operational processes
- GDPR & Greek Law 4624/2019: Enforces transparency and protects personal data processed by AI, with special rules for sensitive data like genetic information
🔐 What’s needed? A tailored AI Governance Framework.
To comply and compete, insurers must embed AI governance into their existing risk and compliance structures. This framework should address legal requirements while also reflecting ethical principles—ensuring AI is transparent, secure, explainable, human-centric, and respectful of customer rights.
✅ Done right, AI delivers on both performance and trust.
With a solid governance approach, AI can unlock operational efficiency, enhance customer satisfaction, boost employee productivity, and reinforce brand reputation—while staying compliant with the rapidly evolving regulatory landscape.
💡 Bottom Line: AI is no longer optional—it’s strategic. But success in AI depends not just on smart implementation, but on responsible, well-governed use.
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