THE APPLICATION OF EXPLAINABLE AI IN RISK TRANSPARENCY FOR THE INSURANCE INDUSTRY
Keywords:
Explainable AI, Risk Transparency, Insurance Industry, Risk Assessment, AI Ethics, Regulatory ComplianceAbstract
The insurance industry is increasingly adopting artificial intelligence (AI) to enhance decision-making processes. However, the opacity of AI models often raises concerns about transparency, accountability, and fairness, particularly in risk assessment and pricing. Explainable AI (XAI) addresses these issues by providing insights into how AI models reach their decisions, fostering trust and compliance with regulatory requirements. This paper explores the role of XAI in improving risk transparency within the insurance sector, reviewing pre-2023 literature and presenting practical applications. Through analysis, we demonstrate the potential of XAI to revolutionize risk assessment practices, ensuring ethical AI usage while enhancing customer trust and operational efficiency.
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