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AI in financial services: How much is too much?

ARTICLE BY

  • Christopher Appanah
  • General Legal Counsel and Partner Principal
  • iTOO Special Risks

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The financial services sector is in the midst of an artificial intelligence (AI) arms race. From underwriting to claims, customer service to compliance, AI is being promoted as the universal solution to every operational challenge.

The pressure to deploy quickly and broadly is intense: implement AI everywhere or risk being left behind. But this is precisely the moment to ask a more difficult question: Not how fast we can adopt AI, but how far we should go. At what point does technological ambition become strategic overreach?

Losing heart

The pace of investment is extraordinary. What began as cautious experimentation has accelerated into widespread deployment, often outstripping our ability to think clearly about long‑term consequences.

Many organisations are adopting AI systems without a solid business case, treating automation as an end rather than a means to improve customer service. This focus on efficiency can threaten the essential relationships in our industry.

Financial services are, fundamentally, a relationship business. Customers want speed and convenience, but they also want fairness, clarity and human understanding. Over‑automation threatens that balance. We cross the line when customers receive decisions they cannot understand, challenge or meaningfully question.

We overstep when declined claims come without explanation or when pricing algorithms yield arbitrary premiums. These are real market issues: chatbots that struggle outside set scripts, automated denials that diminish trust and opaque pricing that leaves customers feeling powerless. Technology devoid of empathy is not true progress.

AI should enable, not replace

The same principle applies to employees. AI should elevate human capability, not diminish it. Used well, it removes the drudgery, such as data gathering, document processing and pattern recognition, freeing people to focus on judgment, creativity and relationship‑building.

However, AI is often used as a replacement rather than an enabling tool, turning staff into validators of machine outputs instead of allowing them to exercise their professional judgment. When employees feel sidelined, and their expertise is minimised to merely approving algorithmic decisions, we’ve crossed a critical boundary.

Risk of acting too soon

This is where Amara’s Law becomes essential. Roy Amara observed that we tend to overestimate the impact of technology in the short term and underestimate its impact in the long term. Right now, our industry is firmly in the overestimation phase.

The hype is loud, the promises sweeping, and the pressure relentless. But transformative technologies rarely deliver their full value immediately. Some AI systems will prove revolutionary; others will require years of refinement; some will ultimately disappoint.

The real risk is that organisations make structural decisions based on today’s euphoria rather than tomorrow’s reality. When we reorganise teams, redesign processes or remove human oversight because we believe AI will be flawless from day one, we are setting ourselves up for long‑term fragility.

Amara’s Law reminds us that the real value of AI will emerge over time through careful integration, iterative improvement and a deep understanding of where human judgment remains irreplaceable. It urges restraint at precisely the moment the market is demanding acceleration.

Boundaries are essential because not all value chain aspects should be automated. Complex underwriting, claims handling and broker interactions require human judgment and empathy, which help insurers differentiate themselves and build trust. Sole reliance on algorithms risks prioritising efficiency over value.

The key question is how to enhance human strengths with AI, not replace them. Free underwriters from administrative tasks to focus on clients. Use AI triage for claims professionals to manage complex cases and implement fraud detection to improve experiences for legitimate claimants. When AI amplifies rather than substitutes, the balance between “enough” and “too much” becomes clearer.

AI will reshape financial services. But the winners will not be those who adopt it fastest. They will be those who adopt it wisely, guided by discipline, grounded in customer value and informed by the humility embedded in Amara’s Law.

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