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As of today, over 3.46 million patents have been filed. Over the years, technology has transformed the way we live, work, and connect. While these innovations are often made for the greater good, for some industries like insurance, they can be a double-edged sword.

Technologies like AI and blockchain have streamlined processes and boosted efficiency, but they also come with a host of new risks that insurers can’t afford to ignore.

Let’s explore some of these emerging risks and examine recent cases that highlight just how serious they can become.

One major risk is cybersecurity, with incidents growing by the day. As insurers increasingly rely on digital platforms and store vast amounts of data, they become prime targets for hackers. Last year alone, there were 317.59 million ransomware attempts reported worldwide.

Bigger, bolder attacks

Take the MOVEit data breach, for example. This 2023 cyberattack affected over 600 organizations and resulted in the exposure of millions of personal files and records. When companies are hit with such attacks, the claims for cyber insurance skyrocket.

Insurers are now rethinking how they assess cyber risks, as the financial fallout from these breaches can run into billions.

Another growing concern is Artificial Intelligence (AI). AI is now being used to automate various tasks, from claims processing to customer service. This automation often results in greater customer satisfaction due to faster settlements, less hassle, and overall better service.

Unfortunately, AI isn’t always fair. When AI systems rely on flawed data, they can make biased decisions like offering lower payouts to certain groups or rejecting claims unjustly.

For example, a 2019 study revealed that a hospital’s algorithm designed to identify high-risk patients flagged fewer Black patients. This happened because the data reflected lower healthcare spending on Black patients, leading the algorithm to incorrectly assume they were healthier than equally ill white patients.

Liability from autonomous vehicles: Who’s to blame?

Autonomous cars sound like a dream come true, but from an insurance standpoint, they’re a nightmare. When a self-driving car crashes, who’s responsible? The driver? The car manufacturer? The software developer? These are tough questions that insurers are still grappling with.

A high-profile accident involving a Tesla Model X was settled in court earlier this year. The incident occurred in 2018 in California when Walter Huang activated the Autopilot feature before the crash. In a court filing to keep the settlement amount private, Tesla stated that it agreed to settle the case to “end years of litigation.”

When tech goes down

We’ve all experienced it—a website crashes or an app stops working. For insurers, these kinds of tech failures can lead to serious business interruptions and operational failures.

Back in July, a faulty update by CrowdStrike caused millions of Windows PCs to crash and disrupted operations. Airports, hospitals, emergency services, and many other critical sectors were affected.

Although an updated patch was sent out within a few hours, it required manual fixes for the computers, one by one. Loss estimates from the crises are believed to have reached upwards of $1.4 billion.

Wrapping it up

The tech boom brings exciting opportunities, but it also opens the door to new risks that insurers have to navigate carefully.

Whether it’s managing cybersecurity threats, ensuring AI fairness, or dealing with the uncertainties of autonomous vehicles, the industry is facing challenges that are evolving just as fast as the technology itself.

Insurers need to stay ahead of these risks by continuously updating their models, strengthening cybersecurity measures, and keeping an eye on emerging trends.

After all, staying informed is the best way to ensure that both they—and their customers—are protected in this brave new world of tech.