Canadian Underwriter

Who owns the risks posed by artificial intelligence? 

July 13, 2022   by Alyssa DiSabatino

AI robot driving a car in a futuristic city

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As artificial intelligence (AI) increasingly affects the performance of products consumers use every day, discussions about who owns the AI risk is likely to become more intricate.

For companies making these products, it’s important to know the risks involved, be they reputational, business-related or consumer risks.

“Sometimes we’re having to talk to our clients about the AI they use — where they could be sued, for example, by a third party who interacts with it…or it could end up being a first-party loss because they’re using it for themselves,” said Kelly MacDonald, Aon’s regional sales director and senior vice president, Commercial Risk Solutions.

AI could fall under a host of liabilities, programs or policies, but many risks associated with AI are only partly insurable, says MacDonald.

“It probably isn’t going to all be picked up under one specific placement, it will be a combination,” adds Katharine Hall, Aon’s senior vice president and cyber practice leader of commercial risk solutions. “How does your general liability placement work with your tech E&O, work with your cyber?”

Nick Kidd, director of business insurance at Mitch Insurance, added AI coverage could fall under anything from product liability placement to professional liability.

“I think it really does depend on the client, the situation of what they do, and how AI is configured into either a product that they’re selling or a professional service they’re offering,” he said.

So, is there anything insurance companies don’t want to cover when it comes to AI?

“[Underwriters] will look at the product, and if it’s an innocuous product that has very little likelihood of causing damage, the rate’s going to be low. If it has a high risk of causing damage, that rate will be high,” Kidd said. “If there’s AI attached to critical components, that will probably put it in the high-risk, high-premium category, and fewer insurers and less appetite.”

But when a product is too new to figure out coverage, insurance companies may draw from other sources as a model for providing coverage, or may decline outright.

“Sometimes it’s just too new, it’s too unknown,” MacDonald added. “You might get some very small supplement sometimes, where it’s a little throw-in of coverage that’s really quite limiting, and it’s not until some time elapses that they can sort of wrap their arms around it and go, ‘Okay, well, this isn’t as big of a deal as we thought it is.’”

Despite potential risk factors, a recent Ipsos survey found roughly 60% of people think AI products and services will make their lives easier, with 60% also expecting AI to profoundly change their daily lives in the coming years.

It’s safe to say AI will continue to change our world, and alongside it, insurance coverage.

“Artificial intelligence is not new, but the different types of areas it has been deployed in are definitely new and evolving, and so the risks will continue to evolve. The pressure is on us, but also on the insurance providers because some older products might not necessarily fit the evolving nature of artificial intelligence,” said Ruby Rai, cyber practice leader at Marsh Canada.

“Any time technology or exposures evolve, it pushes our industry as a whole to create solutions that might not already be there.”


This article is excerpted from one that appeared in the May edition of Canadian Underwriter. Feature image by