Keeping the (Good) Faith: Implications of Emerging Technologies for Consumer Insurance Contracts

Abstract

Developments in tools powered by Artificial Intelligence (‘AI’) and Big Data — both existing and emerging — are predicted to have a revolutionary effect on the insurance industry in the near future. These technological advances have begun materialising at challenging times for the insurance industry in Australia. Various inquiries, including the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, have uncovered evidence of insurers’ unethical, and often unlawful, practices, which adversely affect consumers. The focus of this article is harm that may be caused to consumers arising out of use of AI- and Big Data-powered analytics in terms of discrimination, exclusion, and unfair prices. We analyse insurance-specific rules currently in place, including recent reforms. We focus on anti-discrimination laws, insureds’ duty of disclosure, and insurers’ obligations (including the duty of utmost good faith), and consider whether they sufficiently address the potential harms that using decision-making models may cause to consumers.