33 POLICY Special edition 2023 fairness in algorithmic decision-making. Establishing trust and maintaining customer confidence in AI-driven underwriting processes is essential. Legal and regulatory frameworks must adapt to accommodate AI use in insurance, addressing liability, privacy, and data protection issues. Moreover, the potential displacement of human underwriters raises concerns about job security and the need for upskilling the workforce to adapt to AI-driven environments. While AI advantages insurance underwriting, human underwriters have distinct qualities contributing to their value. Their experience, expertise, judgment, and ability to establish meaningful relationships with the insurer, flexible, and customer-centric approach. Future integration of AI in underwriting will likely involve a balance between leveraging AI’s analytical capabilities and combining the unique strengths of human underwriters, leading to a hybrid model that optimizes efficiency, accuracy, and customer satisfaction. Progress is likely inevitable; therefore, the question is how the AI (or us…) can integrate. How to Avoid Negative Surprises in the Upcoming Renewals Season pricing and sufficient available capacity is critical to the market’s long-term sustainability. Also, we need to capture and share granular exposure data more systematically to improve risk assessment and underwriting. For instance, when assessing vulnerability to earthquakes, factors such as construction codes, their implementation, and ongoing efforts to retrofit buildings for improved performance are important. Precise information, including geographical location, construction types, and year built, is central to accurately assessing the risk. Another important point is to make sure exposure data is updated to capture the latest inflation developments. Long-term sustainability is also why I anticipate the hard market in re/ insurance to continue in light of costly catastrophes, increased demand for coverage and higher values of insured assets driven by inflation. Efforts to reduce uncertainties, improve risk assessment and match actual exposure will support a sustainable global re/ insurance market. Risk managers who incorporate appropriate risk assessment and prevention strategies, rely on the right tools and data, and acknowledge growing exposures will be best positioned to access and secure global capacity, hence avoiding any negative surprises in the next renewals cycle. Continued from page 8 does not apply lies with the plaintiffs and the threshold they must meet is high, bearing in mind that the D&Os’ decisions referred to the very heart of the Bank’s business, namely extension of credit and collection of credit debts. The court further gave weight to the exemptions that some of the D&Os received from the bank for breach of their duty of care towards the Bank. With regard to the wide scope of the waivers included in the settlement agreement, the Judge commented that a settlement represents the price which the D&O Insurers are willing to pay in order to conclude the claim and obtain a full waiver of its causes of action, in order to avoid additional claims. For this reason, the Judge concluded that the Insurers’ demand of wide and comprehensive waivers regarding the alleged causes of action is legitimate. Last but very significantly, the judge rejected the correlation between the amount of the Bank’s loss and the settlement amount and determined that: “losses are an inseparable part of the business reality which is mostly characterized by the management of risks which may result either in profits or in losses”. D&O and Cyber - Updates of Important Developments in Israel Continued from page 6
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