Experts predict that artificial intelligence governance will increase as insurers and reinsurers remain naïve around AI-related risks

(Re)insurers are blissfully unaware of their growing exposure to artificial intelligence-related liabilities, warned law firm Simmons and Simmons.

Speaking at the Dubai World Insurance Congress (Dwic) in March 2022, the company considered some of the risks for insurance companies that use artificial intelligence (AI) in their underwriting practices, as well as flagged the risks in insuring the use of AI.

The challenge is that (re)insurers may not be aware of their exposure until it is too late, warned Minesh Tanna, managing associate at Simmons and Simmons.

This is due to the nature of AI and how it is being used, with vast datasets and highly complex, often opaque, algorithms and advanced analytics sitting behind it.

The concern is that the use of AI may mean that insurers and reinsurers are inadvertently falling foul of equality laws, among other things, because of how their systems determine risk selection and pricing.

Tanna anticipated that AI governance will become more prevalent and that regulators will step up their oversight.

“Because of this, organisations are going to have to get to grips with the technology and the risks of AI,” he added.


Olivia Darlington, the law firm’s head of insurance for Middle East and Africa, said AI was akin to silent cyber in the sense that many carriers and reinsurers do not yet realise how exposed to AI risks they really are. These exposures have been assumed, but not priced for.

Unfortunately, it will take a major loss or series of losses for the industry to wake up to the issue and create bespoke covers, she thought.

Currently, insureds are most likely to try to claim for AI-related losses under their cyber policies, where there is currently the most crossover, although there is also the potential for certain losses to fall within the realm of product liability and professional indemnity insurance.

A hybrid of the three classes is one way the market could seek to affirmatively transfer these emerging risks.