The Future of Credit Underwriting and Insurance Under the EU AI Act: Implications for Europe and Beyond

In modern underwriting, lenders and insurers routinely use external credit scores as a baseline, then apply proprietary data sources, custom scoring models, or business-specific rules to more accurately assess borrower risk. Similarly, machine learning is used to enhance decision-making in the insurance market. However, this approach is now on the brink of tighter regulation as the EU’s first Artificial Intelligence (AI) Act is about to come into play. With new regulations on the horizon, three crucial questions arise for lenders and insurers: (1) How will credit and insurance underwriting activities be classified under the proposed AI Act? (2) What new regulations do companies need to be aware of once the Act comes into effect? ​​(3) How do these rules interact with existing sectoral regulation? This paper provides an overview of the proposed AI Act and examines its potential implications for lenders and insurers, including those that may not utilize AI in the narrow, advanced technical sense but whose automated decision-making systems could still fall within the scope of the regulation.