Insurance, Artificial Intelligence and Big Data : Can Provisions of Chapter 7 Corporations Act Help Address Regulatory Challenges Brought about by New Technologies?

Developments in Artificial Intelligence (AI)- and Big Data- powered tools — both existing and emerging — are predicted to have a revolutionary effect on the insurance industry in the near future. These technological advancements have begun materialising at challenging times for the insurance industry in Australia, with natural disasters adversely affecting the industry’s profits, and a number of legal and regulatory changes coming into force, originating from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommendations. The Royal Commission has uncovered the evidence of insurers’ unethical, and often unlawful, practices, that adversely affect consumers, and we believe that the use of AI- and Big Data- powered analytics by insurers, especially for the purpose of underwriting of contracts, may further exacerbate consumer harm. The focus of this article is the Corporations Act 2001 (Cth).We ask if ch 7 provisions can help address issues that arise in the context analysed, focusing especially on rules that require insurers to provide their services efficiently, honestly and fairly, prohibit unconscionable, and misleading or deceptive conduct, as well as on other obligations of Australian financial services licensees, including the new product design and distribution obligations