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Prudential Reliability of Large Language Models in Reinsurance: Governance, Assurance, and Capital Efficiency

arXiv — cs.LG•Wednesday, November 12, 2025 at 5:00:00 AM
PositiveArtificial Intelligence
The development of a prudential framework for large language models (LLMs) in reinsurance marks a significant advancement in the integration of AI within financial services. This framework, structured around five key pillars—governance, data lineage, assurance, resilience, and regulatory alignment—translates supervisory expectations from established guidelines such as Solvency II and EIOPA into actionable controls. The implementation of the Reinsurance AI Reliability and Assurance Benchmark (RAIRAB) allows for the evaluation of governance-embedded LLMs, ensuring they meet necessary prudential standards. Notably, retrieval-grounded configurations demonstrated impressive performance metrics, achieving a grounding accuracy of 0.90 and significantly reducing hallucination and interpretive drift. These improvements not only enhance transparency but also lower informational frictions in risk transfer and capital allocation. The findings underscore that existing prudential doctrines can accom…
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