AI and Insurance

When Bill Gates recently wrote about AI and the uncertainty surrounding its future, one theme stood out: organizations are adopting artificial intelligence faster than they are developing strategies to manage its risks.

AI is no longer a future consideration. Organizations are already using it to draft marketing content, screen job applicants, analyze data, improve customer service, and automate business processes. As adoption accelerates, many organizations are discovering that their risk management and insurance programs haven’t evolved at the same pace.

For business owners, the question is no longer whether AI will impact their organization. The question is whether their risk management and insurance strategies are prepared to keep up.

Across industries, organizations are using AI to streamline tasks, improve efficiency, and support decision-making in ways that would have seemed impossible just a few years ago.

Today, AI is commonly used to:

• Draft marketing content and customer communications
• Analyze business data and identify trends
• Assist with hiring and recruiting decisions
• Improve customer service interactions
• Generate software code and automate workflows
• Support estimating, design, and project planning

In most cases, these tools are adopted to improve productivity, reduce administrative burdens, and help employees work more efficiently. However, as AI becomes more integrated into day-to-day operations, it also introduces new types of risk that many organizations have not fully considered.

For example:

• What happens if an AI-generated advertisement results in a copyright or trademark dispute?
• Who is responsible if an AI-assisted design error contributes to a financial loss or project delay?
• How would your organization respond to an AI-generated phishing attack or voice-cloning fraud event?
• If an AI-related claim occurs, which insurance policy would be expected to respond?

These are no longer theoretical questions. As businesses continue to adopt AI technologies, insurers, regulators, and courts are beginning to evaluate how responsibility, liability, and insurance coverage apply in real-world situations.

Organizations that understand these risks today will be better positioned to adapt as AI technology, regulation, and insurance coverage continue to evolve.

Artificial intelligence is often discussed as a technology initiative, but its impact reaches far beyond IT departments. As organizations continue integrating AI into everyday operations, business leaders should understand where potential exposures are most likely to emerge.

The risks associated with AI rarely stem from technology itself. More often, they arise from how organizations rely on its outputs, make decisions based on its recommendations, or incorporate it into business-critical processes.

Some of the most common areas of potential exposure include:

Marketing and Communications

AI can help organizations develop content more efficiently, but it can also create unintended risks. Marketing materials, website content, advertisements, and social media campaigns generated with AI may lead to allegations involving copyright infringement, trademark disputes, or advertising injury if content closely resembles another party’s intellectual property.

Hiring and Human Resources

Many employers are exploring AI-driven solutions to support recruiting, candidate screening, and workforce management. As regulators continue evaluating automated hiring tools, organizations should understand the compliance requirements surrounding their use and how employment-related claims may be affected.

Fraud and Social Engineering

One of the fastest-growing concerns surrounding AI involves fraud. Voice cloning, impersonation, and increasingly sophisticated phishing attacks can make it more difficult for employees to distinguish legitimate requests from fraudulent ones. Organizations should review their financial controls and understand how cyber, fraud, and social engineering coverages may respond.

Vendor and Third-Party Risk

Businesses may carefully evaluate their own use of AI while overlooking how vendors, subcontractors, and service providers are using it. As AI becomes more prevalent throughout supply chains, contractual risk transfer provisions and insurance requirements become increasingly important.

The good news is that organizations do not need to reinvent their entire risk management strategy. A few proactive steps can help identify potential gaps and improve preparedness before the next renewal cycle.

Review Your Policies

Look for references to:

• Artificial intelligence
• Generative AI
• Algorithms
• Automated decision-making

Pay attention to exclusions, limitations, and sublimits.

Inventory AI Use Across the Organization

Many organizations are using AI more extensively than leadership realizes. Identify where AI touches:

• Marketing
• Hiring
• Customer service
• Estimating
• Operations
• Software development
• Finance

Review Fraud Controls

Evaluate verification procedures for financial transactions, wire transfers, and payment approvals.

Strengthen Contract Language

Consider how contracts address ownership, liability, and risk transfer related to AI-generated work products.

Develop an AI Use Policy

Even a simple internal policy can help establish expectations, accountability, and governance.

One of the most interesting themes in today’s AI conversation is that while technology may automate certain tasks, it is simultaneously increasing the value of human judgment. AI can generate information quickly, but it cannot replace experience, context, or professional judgment.

The decisions that often have the greatest impact on an organization’s risk profile still require people:

• Reviewing contracts before they are signed
• Navigating complex claims
• Evaluating coverage gaps
• Managing workplace risk
• Making strategic business decisions

Technology can support those efforts, but it cannot fully replace them.