Liability risk considerations in insuring AI
Source: Asia Insurance Review | Jul 2023
In cases where an AI-related error or failure occurs, liability insurance may need to step in to address AI-related losses according to the National Alliance for Insurance Education & Research (NAIE&R).
The insurance education alliance posed a question relating to a loss caused, in part, by AI. “Who is liable – the AI system’s creators, operators or users?” The alliance has put forth several important considerations to bring some clarity on this aspect.
The alliance says that much like other losses where there are multiple parties, it will be important to identify all of the parties that may be at fault for the damage caused in an AI-related loss, including the creator(s), designer(s), installers and maintenance providers.
Liability may rest with the developer or manufacturer of the software, the business or individual who operates it, or the end-user who interacts with it.
Secondly, on evaluating the potential damage, the alliance said AI systems can cause harm in various ways, such as property damage, personal injury, defamation and invasion of privacy. “It is crucial to consider all possible scenarios when assessing the potential risk and determining coverage.”
The alliance said it is important to be current on regulations governing AI. It said, “For example, the European Union’s General Data Protection Regulation and California’s Consumer Privacy Act, both have provisions that require organisations to be transparent about how they collect and use consumer data – including data collected through AI.” A