Appendix IV. Insurance for AI
AI tools and machines become essential in various industries, specific insurance products are needed to cover their associated risks:
Professional Indemnity Insurance: Legal costs and claims for damages from errors or negligence by AI tools, such as diagnostic AI systems.
Example: Covers potential misdiagnosis claims against medical AI tools like IBM Watson for Oncology.
Product Liability Insurance: Protects against claims of injury or damage caused by AI products, crucial for autonomous vehicles or robots.
Example: Covers accidents caused by autonomous vehicles due to software malfunctions.
Cyber Insurance: Covers costs associated with data breaches, including legal fees and compensation.
Example: Protects AI platforms handling sensitive data from cyber attacks.
Errors and Omissions Insurance (E&O):Covers claims of inadequate work or negligence by AI software developers.
Example: Covers financial losses from erroneous trades made by AI in financial trading.
Operational Insurance: Covers risks of running AI tools, including breakdowns and downtime.
Example: Protects against production losses from AI-driven manufacturing robots halting.
Importance and Benefits
Risk Mitigation: Reduces financial risks associated with AI.
Trust and Confidence: Builds trust with clients and partners.
Regulatory Compliance: Ensures compliance with industry regulations.
Challenges
Assessing Risk: Complex due to evolving AI technology.
Policy Customization: Needs tailoring to specific AI risks.
Cost: High premiums reflect potential high claims costs.
In summary, insurance for AI tools and machines is crucial for mitigating financial risks, ensuring regulatory compliance, and building stakeholder trust.