The Impact and Development of AI on the Actuarial Industry

Research Article
Open access

The Impact and Development of AI on the Actuarial Industry

Qishan Zhong 1*
  • 1 School of Accounting and Finance, Taylor’s University, Subang Jaya, Malaysia    
  • *corresponding author 0364782@sd.taylors.edu.my
AEMPS Vol.185
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-141-9
ISBN (Online): 978-1-80590-142-6

Abstract

The insurance industry is undergoing a transformative evolution as artificial intelligence (AI) revolutionizes traditional actuarial practices. Although AI gets to enhance predictive models, operational efficiency and product innovation, however, its integration also brings major challenges, including ethical dilemmas, regulatory obstacles, algorithm opacity and workforce displacement. This article examines the practical challenges of applying artificial intelligence in the field of actuarial, especially on data governance, transparency and accountability. Through the industry case studies, it had analyzed the impact of artificial intelligence on underwriting, claim handling, fraud detection and compliance, meanwhile emphasis the emerging risks such as decision-making bias and regulatory non-compliance. This article research result shows that, the successful application of artificial intelligence requires a robust system of technical governance framework, an explainable models, employee skills retraining, and proactive supervision and coordination. Suggestions include establishing an ethical supervision mechanism, improving the transparency of algorithmic decision-making, and promoting continuous learning to make up for the skill gap. The present paper advocates for a harmonious blend - maximizing the advantages of artificial intelligence while keeping the disadvantages at bay - towards creating responsive and fair outcomes. In the end, the present paper makes pragmatic recommendations to insurance firms, actuaries, and policymakers to help insurance firms, actuaries, and policymakers cope with the convergence of the fast-evolving world of artificial intelligence and actuarial science and appeals for protection of the trust of the people and maintenance of professional ethics during this period of accelerated technology advancement.

Keywords:

Artificial Intelligence, Actuarial Science, Automation, Data Governance, Workforce Displacement

Zhong,Q. (2025). The Impact and Development of AI on the Actuarial Industry. Advances in Economics, Management and Political Sciences,185,70-77.
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References

[1]. Richman, R. (2018). AI in actuarial science. Available at SSRN 3218082.

[2]. Devaraj, S. M. (2024). The Impact of Cloud and AI on Actuarial Science and Life Insurance Pricing Models. Journal ID, 9471, 1297.

[3]. Wang, Y. (2021). Predictive machine learning for underwriting life and health insurance. Actuarial Society of South Africa.

[4]. Lozano-Murcia, C., Romero, F. P., Serrano-Guerrero, J., Peralta, A., & Olivas, J. A. (2024). Potential Applications of Explainable Artificial Intelligence to Actuarial Problems. Mathematics, 12(5), 635.

[5]. Lior, A. (2021). Insuring AI: The role of insurance in artificial intelligence regulation. Harv. JL & Tech., 35, 467.

[6]. Eling, M., Nuessle, D., & Staubli, J. (2022). The impact of artificial intelligence along the insurance value chain and on the insurability of risks. The Geneva Papers on Risk and Insurance-Issues and Practice, 47(2), 205-241.

[7]. MUPA, M. N., TAFIRENYIKA, S., RUDAVIRO, M., NYAJEKA, T., MOYO, M., & ZHUWANKINYU, E. K. (2025). Machine Learning in Actuarial Science: Enhancing Predictive Models for Insurance Risk Management.

[8]. Miller, J. (2025, March 5). US health insurers face pressure over AI role in claim decisions. Financial Times.

[9]. Villalonga-Vivoni, C. (2025, March 4). CT senator wants to restrict insurance companies from using AI to decide health care. InsuranceNewsNet. Retrieved from https://insurancenewsnet.com/oarticle/ct-senator-wants-to-restrict-insurance-companies-from-using-ai-to-decide-health-care

[10]. The Guardian. (2025, January 25). New AI tool counters health insurance denials decided by automated algorithms. Retrieved from https://www.theguardian.com/us-news/2025/jan/25/health-insurers-ai

[11]. Financial Times. (2024, September 15). AI risks making some people 'uninsurable', warns UK financial watchdog. Retrieved from https://www.ft.com/content/9f9d3a54-d08b-4d9c-a000-d50460f818dc

[12]. The Edge Malaysia. (2017, January 5). Japan’s Fukoku Mutual Life Insurance to replace workers with IBM Watson AI. The Edge Markets. Retrieved from https://theedgemalaysia.com/node/373468

[13]. Accenture. (2018, October 2). Insurers must reskill and reshape their workforces to seize growth opportunities from artificial intelligence, according to research from Accenture. Accenture Newsroom. Retrieved from https://newsroom.accenture.com/news/2018/insurers-must-reskill-and-reshape-their-workforces-to-seize-growth-opportunities-from-artificial-intelligence-according-to-research-from-accenture

[14]. Merakāta. (n.d.). Case study - Data governance. Retrieved from https://www.merakata.com/case-study-data-governance

[15]. Cognizant. (n.d.). AI for insurer's biometric data protection—Case study. Retrieved from https://www.cognizant.com/us/en/case-studies/ai-insurer-data-protection

Cite this article

Zhong,Q. (2025). The Impact and Development of AI on the Actuarial Industry. Advances in Economics, Management and Political Sciences,185,70-77.

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About volume

Volume title: Proceedings of ICEMGD 2025 Symposium: Innovating in Management and Economic Development

ISBN：978-1-80590-141-9(Print) / 978-1-80590-142-6(Online)
Editor：Florian Marcel Nuţă Nuţă, Ahsan Ali Ashraf
Conference website: https://2025.icemgd.org/Lahore.html
Conference date: 23 September 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.185
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Richman, R. (2018). AI in actuarial science. Available at SSRN 3218082.

[2]. Devaraj, S. M. (2024). The Impact of Cloud and AI on Actuarial Science and Life Insurance Pricing Models. Journal ID, 9471, 1297.

[3]. Wang, Y. (2021). Predictive machine learning for underwriting life and health insurance. Actuarial Society of South Africa.

[4]. Lozano-Murcia, C., Romero, F. P., Serrano-Guerrero, J., Peralta, A., & Olivas, J. A. (2024). Potential Applications of Explainable Artificial Intelligence to Actuarial Problems. Mathematics, 12(5), 635.

[5]. Lior, A. (2021). Insuring AI: The role of insurance in artificial intelligence regulation. Harv. JL & Tech., 35, 467.

[6]. Eling, M., Nuessle, D., & Staubli, J. (2022). The impact of artificial intelligence along the insurance value chain and on the insurability of risks. The Geneva Papers on Risk and Insurance-Issues and Practice, 47(2), 205-241.

[7]. MUPA, M. N., TAFIRENYIKA, S., RUDAVIRO, M., NYAJEKA, T., MOYO, M., & ZHUWANKINYU, E. K. (2025). Machine Learning in Actuarial Science: Enhancing Predictive Models for Insurance Risk Management.

[8]. Miller, J. (2025, March 5). US health insurers face pressure over AI role in claim decisions. Financial Times.

[9]. Villalonga-Vivoni, C. (2025, March 4). CT senator wants to restrict insurance companies from using AI to decide health care. InsuranceNewsNet. Retrieved from https://insurancenewsnet.com/oarticle/ct-senator-wants-to-restrict-insurance-companies-from-using-ai-to-decide-health-care

[10]. The Guardian. (2025, January 25). New AI tool counters health insurance denials decided by automated algorithms. Retrieved from https://www.theguardian.com/us-news/2025/jan/25/health-insurers-ai

[11]. Financial Times. (2024, September 15). AI risks making some people 'uninsurable', warns UK financial watchdog. Retrieved from https://www.ft.com/content/9f9d3a54-d08b-4d9c-a000-d50460f818dc

[12]. The Edge Malaysia. (2017, January 5). Japan’s Fukoku Mutual Life Insurance to replace workers with IBM Watson AI. The Edge Markets. Retrieved from https://theedgemalaysia.com/node/373468

[13]. Accenture. (2018, October 2). Insurers must reskill and reshape their workforces to seize growth opportunities from artificial intelligence, according to research from Accenture. Accenture Newsroom. Retrieved from https://newsroom.accenture.com/news/2018/insurers-must-reskill-and-reshape-their-workforces-to-seize-growth-opportunities-from-artificial-intelligence-according-to-research-from-accenture

[14]. Merakāta. (n.d.). Case study - Data governance. Retrieved from https://www.merakata.com/case-study-data-governance

[15]. Cognizant. (n.d.). AI for insurer's biometric data protection—Case study. Retrieved from https://www.cognizant.com/us/en/case-studies/ai-insurer-data-protection

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