Insurtech Counterpart has expanded its proactive AI coverage and added technology E&O insurance policies to address the new and complex risks that many businesses are now exposed to as a result of their adoption of artificial intelligence (AI) tools.
Counterparts say traditional insurance policies are barely keeping up with the growing reliance on AI tools, often excluding coverage for the very technology that businesses currently rely on.
AI adoption among small and medium-sized businesses is rapidly increasing, with 92% now using AI in some way, primarily for purposes such as research, marketing, and customer support. Automated decision-making tools quickly become part of daily operations, increasing efficiency but also amplifying risk.
Insurers are increasingly excluding AI-related risks and automated decision-making from coverage, a trend that leaves many companies vulnerable, according to a study by the Harvard Law Forum on Corporate Governance.
“AI-related risks are rapidly evolving,” said Omid C. Farashahi, insurance coverage partner at BatesCarey LLP. “Coverage is never guaranteed in traditional E&O, D&O, cyber, and CGL policies; these policies are ‘silent’ to such exposures, which may be mitigated by AI-related exclusions and other insurance limitations.”
“To avoid potential gaps in coverage, companies should consider aggressive coverage for concentric circles of AI-related liability.”
As AI remains a gray area for many insurance companies, Counterpart claims its Affirmative AI Coverage directly addresses errors generated from first-party and third-party AI tools, eliminating uncertainty.
“AI risks have moved from theory to the courtroom,” said Counterpart Professional Responsibility Director Mike Muglia. “Many small business owners and startup leaders are using AI to work faster, process more information, and provide a higher level of service, but they don’t always realize the responsibility that comes with it.”
He added: “These approvals provide our brokers with practical solutions to complaints arising from everyday AI use, including adverse outcomes, poor decision making, and machine-generated bias. As more companies rely on AI to operate and grow, these risks will only become more common.”
