2026-10-28 · Source: Insurance Business UK
Summary in 3 Points • Tim Hardcastle emphasised the need for insurers to understand AI's risks and adjust policies accordingly. • Insurers must identify specific insurable AI events rather than blanket coverage for AI as a whole. • The emergence of exclusions in cyber cover could limit available protection for clients using AI. --- Tim Hardcastle, CEO of INSTANDA, highlighted the importance of insurers understanding the risks associated with AI and adapting their policies to address these challenges. He noted that while underwriters have the expertise, the speed of product updates often lags behind the evolving risks, particularly in the context of AI's unpredictable behaviour. Insurers need to focus on specific insurable events related to AI, such as incorrect outputs or breaches of contract, rather than attempting to cover AI comprehensively. Hardcastle also pointed out the potential for exclusions in cyber insurance as AI technology develops, which could narrow the coverage available to clients. He drew parallels between the current state of AI insurance and the evolution of cyber insurance over the past two decades, suggesting that AI will mature into a defined class with established policy wordings and claims data. However, this will require insurers to implement underwriting decisions into product changes more swiftly to keep pace with the risks. Insurers must adapt policies to cover specific AI risks, as seen in the evolution of cyber insurance, to avoid gaps in coverage.
Insurers must adapt policies to cover specific AI risks, as seen in the evolution of cyber insurance, to avoid gaps in coverage.