Last month, our firm met with professional indemnity insurers in London, focusing increasingly on the implications of artificial intelligence (AI) in professional services. As AI tools gain traction, insurers are concerned about potential risks, especially regarding unverified AI outputs and the handling of confidential client data. With incidents like the Wikeley case highlighting the perils of unchecked AI use, it’s critical for professionals to establish protocols ensuring adequate human oversight.
Insurers seek clear guidelines and training for AI tool usage to address risks, such as “hallucinations” in AI outputs and breaches of intellectual property rights. The need for formal governance structures is growing as only 13% of businesses currently have auditing frameworks for AI.
To mitigate risks, insurers may impose higher premiums or exclusions if clear, documented responses regarding AI usage and governance aren’t provided. Companies demonstrating effective AI risk management will likely fare better in securing favorable coverage terms.
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