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Insurance Europe warns of AI coverage challenges

17th February 2021 - Author: Matt Sheehan

European insurance and reinsurance federation, Insurance Europe, has warned that changes to the existing liability framework for emerging technologies, such as artificial intelligence (AI), could result in challenging insurability issues.

artificial-intelligenceInsurance Europe supports the use of AI for exploring ways to more accurately forecast risk and develop new products, and also backs the provision of insurance for services and users that rely on AI-powered technologies.

Currently, the existing liability regime at European level, the Product Liability Directive (PLD1), in conjunction with national tort law, is viewed as working well in practice for these kinds of technologies.

But Insurance Europe believes that major changes to this liability framework — for instance creating a separate liability regime for AI, introducing mandatory insurance, removing exemptions to liability or making any changes to the burden of proof — could result in challenging insurability issues.

“As AI encompasses a set of technologies that are still at an early stage of development, legislating on liability for such highly advanced systems should be deferred until their specific risk potential can be better understood in the context of their use in different lines of business and the needs of those sectors,” the federation stated.

“Any new rules at EU level would be useful and appropriate only to address any potential gaps where current rules and regulations are found to be insufficient. Insurance Europe is of the view that this is currently not the case.”

The PLD is viewed by regulators as a well-balanced system of liability that provides a high level of protection to consumers while taking into account manufacturers’ legitimate interests, thereby encouraging growth and innovation.

Any change to this balance could therefore negatively impact the cost and availability of insurance, they warn, as existing product liability insurance products have been devised and priced to reflect the balance between consumer and producer obligation that is provided for under the current liability regime.

However, Insurance Europe added that the PLD could be strengthened by extra non-legislative guidance on the interpretation of some key concepts, and said the ability to track software updates is also worthy of consideration.

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