Australia’s national science agency, CSIRO, and the Insurance Council of Australia have released a joint report setting out how artificial intelligence could be deployed to ease mounting pressures on the insurance sector and improve outcomes for customers.
The report, titled AI for Better Insurance: Enhancing Customer Outcomes amid Industry Challenges, examines ways AI could help insurers tackle rising costs, intensifying natural hazard risks and shifting customer expectations.
According to the organisations, about a third of the nation’s housing stock — an estimated 5.6 million properties — faces some level of bushfire exposure, while flood risk affects roughly one in 12 homes, or 1.36 million properties. Catastrophe-related claims have climbed by almost half over the past five years and are forecast to increase by around 5 per cent annually to 2050, compounding the impact of inflation, labour shortages and higher reinsurance costs on premiums and claims.
CSIRO project lead Dr Alexandra Bratanova said the timing was significant as insurers search for new ways to deliver value and protection. “The insurance sector is facing significant pressures from climate change, rising costs, and shifting customer demands,” Dr Bratanova said.
“Our research identified seven key areas to guide the responsible adoption of AI in Australia’s insurance sector, with the potential to improve affordability and customer service, and strengthen industry resilience.”
She said AI tools could streamline processes and better tailor interactions to individual needs, but cautioned the shift must be carefully governed. “However, this transformation needs to be managed responsibly, with appropriate governance frameworks and guardrails to protect consumer privacy and ensure equitable outcomes.”
The report identifies five immediate areas where AI could be put to work: speeding up claims handling through automation; detecting and preventing fraud; sharpening underwriting with richer data and modelling; forecasting the impact of natural disasters; and improving risk and regulatory compliance.
Insurance Council chief executive Andrew Hall said the findings offered practical guidance as the sector begins to scale AI. “This report provides a practical roadmap for insurers to harness AI responsibly while keeping customer outcomes front and centre,” Mr Hall said.
“By implementing AI solutions effectively, we can improve affordability and enhance our natural disaster response and recovery – ultimately helping more Australians access the financial protection they need.”
“The industry is committed to prioritising safe adoption by addressing privacy and safety concerns, and AI system biases so that these technologies serve all Australians fairly.”
Beyond the use cases, the paper sets out seven priorities for advancing adoption: using AI to deliver better, more accessible cover; strengthening governance to ensure responsible use; deepening collaboration across the sector to build resilience; taking a strategic, proactive approach to deployment; investing in workforce skills; increasing transparency to build trust; and innovating products to meet emerging risks.
The research, developed with the ICA’s AI Working Group, draws on international frameworks and evolving best practice for responsible AI. CSIRO and the council say the roadmap is intended to help insurers balance affordability, service and resilience as climate and economic pressures intensify.
