AI from Regulatory and Audit Perspectives

Overview

The Society of Actuaries (SOA) Research Institute convened an expert panel of insurance regulators and auditors to discuss how AI is being defined and used within insurance, along with considerations on governance, trust and ethics. The panelists distinguished between AI-assisted decision making and AI-driven decision making. Advances in generative AI have accelerated both adoption and regulatory interest. The conversation also explored the growing role of AI within actuarial and insurance functions and the need for appropriate governance, oversight and accountability frameworks.

Given the rapid evolution of AI technologies, industry practices, and regulatory developments, some views and conclusions noted in this paper may evolve as the field continues to mature.

Key Findings

A recurring theme throughout the panel discussion was that governance, accountability, and human oversight are becoming as important as the technology itself. The panelists shared broad agreement that AI should augment, rather than replace, professional judgment. Panelists noted that organizations must understand and govern the AI systems they use, regardless of whether those systems are developed internally or obtained from third-party vendors.

Panel discussion highlights include:

• AI governance, accountability and oversight in the insurance industry may be as important as the technology itself.
• Human judgment remains essential, particularly in high-stakes decisions affecting consumers. Panelists view AI as a tool to augment professional expertise rather than replace it.
• There is importance of transparency, ongoing monitoring, documentation, and independent challenge processes. Alongside overall predictive accuracy, panelists noted to consider fairness, bias and societal implications.
• The future of effective AI oversight will likely require a multidisciplinary approach that combines actuarial rigor, technical expertise, legal and compliance perspectives, and social science insights.
• Use of AI by both insurers and regulators will likely continue expanding; and professional accountability, transparency, and effective governance frameworks will remain essential.
• The fundamental principles of risk management, oversight, and responsible decision-making will continue to guide its use within the insurance industry.

Podcast

AI from Regulatory and Audit Perspectives: A Roundtable Discussion with Joe Alaimo

Acknowledgements

The researchers’ deepest gratitude goes to those without whose efforts this project could not have come to fruition: the Project Oversight Group for their diligent work overseeing, reviewing and editing this report for accuracy and relevance.

Project Oversight Group members:

Carlos Arocha, FSA

Andrew Azeredo, ASA, MAAA

Donna Novak, ASA, MAAA, FCA, MBA

Mason Roberts, FSA, MBA

At the Society of Actuaries Research Institute:

Korrel Crawford, Senior Research Administrator

Dale Hall, FSA, MAAA, CERA, Managing Director of Research