Examining Crucial Liability Risk Factors When Insuring AI
Nowadays, there is much discussion surrounding artificial intelligence and its applications. While AI has the potential to enhance time and resource efficiency, it is crucial to consider the consequences of errors or malfunctions related to AI.
The National Alliance for Insurance Education & Research suggests that having liability insurance can help cover potential harm inflicted by an AI software or system.
The industry alliance has raised a question worth considering regarding who should be held responsible for a loss caused partly by AI. They are asking whether the liability should fall on the creators, operators, or users of the AI system.
Important factors to consider:
1. Who might bear potential liability?
In case of an AI-related loss, like losses involving multiple parties (such as building losses with several contractors), it’s crucial to pinpoint all potentially accountable parties. This may refer to all individuals involved in the creation, design, installation, and maintenance of the product or service in question.
The alliance clarifies that liability for software could potentially fall on the developer, manufacturer, operator (whether it’s a business or an individual), or end-user.
2. Evaluate the origin and magnitude of the potential harm.
It’s important to assess all possible scenarios and determine the potential risks associated with AI systems, including damage to property, bodily harm, defamation, and intrusion into private life. This will help make informed decisions about coverage and minimize harm.
The assessment of liability will be complex because the AI system interacts with external technologies and vendors beyond the company’s control.
3. It is essential to remain updated with regulations.
The alliance emphasized that organizations must disclose their methods of collecting and utilizing consumer data, which includes data obtained through AI, in compliance with the EU’s GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) regulations.
4. Comprehending the concept of “black box” challenges.
According to the National Alliance for Insurance Education & Research, understanding AI can be difficult because of its complex neural connections. To enhance comprehension, insurance risk specialists and AI developers must collaborate.
5. Acknowledge that conventional approaches may fall short.
The alliance stated that a general policy that fits everyone would not be effective for this unpredictable risk. Specific policies will be developed to address concerns related to cyberattacks, intellectual property conflicts, and liability claims resulting from malfunctions of AI systems. These policies will cater to both AI technology providers and users.
Chubb, AXA XL, Zurich, and Alliance are the insurance companies that currently offer liability insurance policies for AI, as stated by the alliance.