Artificial intelligence in actuarial sciences and new risks from the digital era

O. Lopez

May 19, 2021

Abstract : In insurance, prediction is crucial, since the price of a contract is based on the anticipation of future claims. Nowadays, data are more abundant and available, and massive databases create new opportunities to develop artificial intelligence based technique in the field of insurance. These techniques allow to better predict, prevent claims to happen, but also allow to improve risk management procedures. The aim of this course is to introduce the perspective and advances in AI in insurance, through different practical examples, but also taking into account the specificities of the sector (regulation, profitability, competition…). We will also introduce the new challenges linked to new risks connected with the digital transformation, namely cyber insurance.

Outline:

I) Introduction : overview of the topic of Big Data and Artificial Intelligence in insurance

II) Pricing

  1. Machine learning and pricing
  2. Consequences on mutualization
  3. Intelligibility, interpretation of the price

III) Reserving, risk management

  1. Reserving methods
  2. How to model the “lifetime” of a claim
  3. Example : Neural networks for expert reports analysis
  4. Example : machine learning methods combined with copula theory

IV) Cyber insurance

  1. Overview of cyber risk
  2. How to analyze cyber claims
  3. Accumulation risk and cyber pandemic