Interview with ChatGPT-4 and Coverage Counsel: Exploring the Influence of Generative AI on Insurance Coverage and Expert Recommendations for Policyholders

Generative AI and Its Impact on Insurance: Insights from ChatGPT-4

Generative AI is revolutionizing the global economy, and according to estimates by Goldman Sachs, it is expected to contribute to a $7 trillion increase in the global GDP. This transformative technology is poised to disrupt various sectors, including insurance, offering new products, services, and opportunities for increased efficiency. To shed light on the impact of generative AI on insurance, we turned to the renowned AI oracle, ChatGPT-4, to provide its perspective on the top three ways this technology will affect policyholders. Here’s what ChatGPT-4 had to say:

1. Personalized Policies: By leveraging a vast range of data, AI can create customized policies that accurately reflect each policyholder’s risk profile. This could lead to better coverage and potentially lower costs for policyholders.

2. Expedited Claims Processing: The use of AI in claims processing can significantly accelerate the time it takes for policyholders to receive payouts. Automated systems can review claims, assess damages, and approve payouts quickly and accurately.

3. Policy Language and Interpretation: Generative AI has the potential to assist in understanding complex policy language and terms. With proper training on insurance law and policy documents, AI can generate explanations and clarifications in plain language.

While there may be direct opportunities for policyholders to utilize generative AI in underwriting and claims, our focus here is on the insurable risks associated with this technology. Any company incorporating generative AI into its operations should assess its exposures, existing insurance programs, and identify any potential coverage gaps. Let’s explore some of the main risks and exposures identified across different lines of insurance:

Professional Liability/Errors & Omissions Insurance:

Using generative AI to answer questions or develop work product carries inherent risks. Current generative AI models are known to produce erroneous or “hallucinatory” output without a factual basis, sometimes even justifying it with fabricated sources. An attorney learned this the hard way when citing non-existent legal authorities provided by ChatGPT, leading to admonishment and sanctions by the Court. Coding errors generated by AI can have significant adverse consequences, both internally and externally, potentially exposing the company to network breaches. Policyholders using generative AI should evaluate their existing professional liability or Errors & Omissions (E&O) coverage and ensure that AI-related claims fall within the scope of “professional services” covered. Additionally, policyholders should closely examine proposed policies or renewals for any exclusions or limitations related to generative AI. Internal policies governing employee use of AI are also crucial for both unauthorized usage and fulfilling E&O policy application requirements.

Commercial General Liability/Media Liability Insurance:

Generative AI raises concerns in terms of intellectual property infringement and publicity rights. Lawsuits have been filed against generative AI platforms, alleging improper use of copyrighted images or open source code. Claims related to allegedly infringing AI output are likely to emerge. Some existing insurance policies may provide coverage for claims involving copyright infringement, trade dress, slogan violation, and invasion of privacy. However, other claims relating to generative AI’s use of IP may fall outside the scope of coverage. Media Liability coverage, within cyber insurance or specialty Technology/Media Liability insurance, may respond to IP claims arising from generative AI. Policyholders utilizing generative AI should review their policies, particularly CGL and cyber policies, to assess applicable coverage for IP claims and consider obtaining additional coverage if necessary.

Employment Practices Liability Insurance (EPLI):

Generative AI’s potential for biased outcomes and offensive content raises concerns. Despite commitments from leading AI platforms to address these issues, there is still a risk of routine interactions going awry and resulting in problematic content. Depending on the use of generative AI, policyholders should consider potential exposure to claims alleging disparate treatment of protected classes or accusations of hostile work environments due to offensive AI-generated content. Policyholders should review their EPLI insurance to ensure coverage for such potential claims.

In conclusion, the advancements in generative AI present numerous opportunities along with new liability exposures. Policyholders should collaborate with brokers and experienced coverage counsel to optimize their insurance coverage for potential claims associated with generative AI. It’s also crucial to monitor how the insurance industry responds to developments in this technology and evaluate new and renewing policies for changes that may impact generative AI-related coverage.

Editor’s Notes:

Generative AI is revolutionizing industries across the globe, and the insurance sector is no exception. As this technology continues to evolve and transform the way we do business, it’s essential for companies to understand the potential risks and adapt their insurance programs accordingly. By staying proactive and working closely with insurance brokers and coverage counsel, policyholders can navigate the challenges and capitalize on the opportunities presented by generative AI.

For more insights and in-depth analysis on the latest trends in AI and its impact on various industries, visit GPT News Room.

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