The insurance market’s overall understanding of generative AI-related risk is still within it’s early stages, but this developing form of the technology is expected to impact many different lines within the sector, such as Technology Errors and Omissions / Cyber, Professional Liability, Media Liability, Employment Practices Liability, and more, reports Aon.
Generative AI is a type of artificial intelligence that contains the ability to create material such as images, music or text. This form of AI is already proving to be quite a disruptor across the industry, and its adoption is said to be growing at an “explosive rate.”
In its Global Insurance Market Insights report for the third quarter of 2023, broker Aon highlights how insurance policies can potentially address AI risk through affirmative coverage, specific exclusions, or by just “remaining silent”, which ultimately creates ambiguity.
According to Aon, insurers are defining their strategies around this rapidly changing risk landscape through a combination of different factors.
One of these involves insurers building out their underwriting requirements which are already very robust.
While underwriters are just beginning to ask questions, the process has the potential to become quite troublesome and prolonged with the many potential applications that could wind up being created and eventually deployed across the sector.
At the same time, insurers are also developing creative AI products and solutions that they are then adopting and embedding within their own platforms.
Another key factor that is being seen across the industry, is that insurers are expanding their technology-based talent competencies. This is either being done organically, or through partnerships and/or acquisitions, in order to support underwriting and pricing through technical assessments and monitoring.
Moving forward, while it is clear that the productivity gains of generative AI are easily recognizable, Aon heavily suggests that companies should ensure that they are taking care and conducting regular risk assessments as they embrace this new way of working.
A key figure to take note of is that Bloomberg Research forecasts that the generative AI market will grow to $1.3 trillion over the next decade, up from $40 billion in 2022.
Aon also notes that as firms quickly look to share that growth, it would be wise for them to also remain focused on the potential risks and issues that will arise along the journey too.
