Evolving technology insurance with AI
It's undeniable that artificial intelligence (AI) is making waves in technology and fundamentally shifting the landscape. In a period of rapid development, the need for effective and clear insurance in these spaces is greater than ever, and brokers understandably want to ensure that what they’re offering their clients is fit for purpose.
Adam Atkins, Head of Technology at Hiscox, spoke with Insurance Business TV last month on this topic, sharing that the UK government’s AI action plan, released in January, was a factor in Hiscox making changes recently to its cover.
“With us [the UK] doubling down, there's going to be loads of investment, loads of interest in AI that’s going to flood the tech market... those businesses using it, selling it, advising on it, need insurers to talk their language and to give them cover for something that’s going to be big and going to be meaningful.”
An important feature of the recent update is affirmative cover for AI, or otherwise put, explicit protection for AI risks. Insurance Times analysis in June pointed out some of the legal concerns being raised – that AI itself could become a risk-bearing entity in its own right. Who is making the decisions, and therefore bears responsibility, when AI is involved?
As part of recent updates, Hiscox has introduced four new insuring clauses, aimed at aligning to the contractual demands of tech businesses. These were informed by discussions with Hiscox clients, which crucially revealed the different language used in technology insurance contracts. Hiscox has worked to incorporate the language of the industry into its policy wordings, for real clarity.
These changes include explicitly insuring AI-related professional indemnity risks, from contract execution failures to negligent AI advice. The four new insuring clauses are network security liability, network interruption liability, persona data claims, and injury & property damage from technology failures.
Other inclusions are:
- Affirmative cover for Green Technology
- Automatic waiver of subrogation
- Automatic cover for additional insureds
- Automatic cover for overseas support staff & entities
- Enhanced acquisition flexibility
In May, Hiscox commented in Insurance Business on how brokers can play a critical role in helping to prevent some of the most common claims in tech, which often centre around breach of contract. Atkins referred to this as stemming from the ‘gap between expectation and reality’, which can cause ‘costly disputes.’
Atkins shared that savvy brokers can help clients avoid the stress of a claim by encouraging clear contracts with defined expectations, recommending legal or risk advisors for more complex projects, and making sure coverage is clear up-front, to avoid misunderstandings. In some cases, it may be appropriate for a broker to mediate between their clients and tech providers during a dispute.
There’s an argument for brokers specialising, due to the complexity of tech and AI risks. ‘The ideal broker doesn’t need to be a coder but must comprehend how that technology is going to be embedded, and what the repercussions can be if it goes wrong,’ said Atkins in Insurance Business. He recommended that brokers should make a priority of attending tech-focused industry events, keeping an eye on trends, and encourage internal specialisation to help them stay ahead.
Technology is one of the twelve specialist sectors that Hiscox is focused on. Hiscox insures a diverse range of businesses and individuals in all corners of the technology sector, from tech consultants and service providers through to software designers and developers.
This article has been written with source material from our partner insurer Hiscox as well as publicly available information. The content reflects the views and expertise of the respective contributors and is intended to offer insights on current industry topics. Please note that this article does not necessarily represent the views of Hedron Network or its affiliates.