Generative artificial intelligence has the potential to revolutionize many industries, but it also comes with plenty of risks — some undiscovered. Leaders must be open to innovative ways of mitigating such a unique risk panel. Insurance policies can contribute to risk management efforts; however, insurance has other qualities that benefit generative AI companies. Let’s review how insurance can help generative AI companies to avoid catastrophe.
As a type of AI, generative AI uses massive datasets of existing content to produce new and (hopefully) original content. For example, generative AI can write the best man’s speech for a wedding and recommend the best way to reseed our yards, but it can also detect fraud and generate financial forecasts.
Experts estimate the global generative AI market to grow from $11.3 billion in 2023 to a substantial valuation of $76.8 billion by 2030. It’s hard to believe that generative AI, with all its potential, could be a double-edged sword.
On the upside, more sophisticated AI systems mean businesses have a cost-efficient content creation process at their fingertips. AI can drum up personalized consumer experiences and innovative product designs, plus simulate complex scientific and mathematical scenarios — the importance of generative AI cannot be understated.
However, on the downside, with great potential comes substantial risk. For example, generative AI can be used maliciously, producing fake news, synthetic media, or misleading data. These capabilities can be weaponized, leading to misinformation campaigns, financial fraud, or security breaches.
The reliance on large datasets for training these models might inadvertently perpetuate biases in the data, leading to unfair or skewed outputs. These risks can translate into legal liabilities, reputational damage, and financial losses for companies operating in this domain. The following are examples of generative AI companies that have been sued for errors, omissions, or media liability claims:
With AI lawsuits trickling in, the insurance industry has shifted its focus to support generative AI companies to better comply with regulations. For example, errors and omissions (E&O) and media liability insurance address data privacy and copyright infringement issues. These coverages protect AI companies from the financial consequences of lawsuits alleging they’ve violated people’s privacy rights or infringed copyright, two common allegations.
Despite the safety net and support of insurance policies, AI leaders must understand that this sector is still in its early developmental stages, and its regulatory framework is muddy, at best. Leaders need to think about regulatory compliance and mitigate risks to ensure the responsible development of this technology.
An excellent place to start is securing the right insurance policies. Yet, with such new and unknown risks, where do generative AI companies begin?
Here’s the thing: generative AI companies operate at the cutting edge of technology, creating content and innovations that carry unique risks. Several insurance policies are crucial for these entities.
The intrinsic nature of generative AI — creating original, sometimes unpredictable content — makes E&O and media liability insurance especially vital. E&O insurance safeguards against potential glitches, inaccuracies, or errors that can inadvertently arise in AI-generated outputs. Media liability insurance is also pivotal because AI’s content creation can inadvertently breach existing media norms, leading to legal claims.
As mentioned, the regulatory framework for generative AI companies is unclear. Its rapid evolution of artificial intelligence, particularly in the generative domain, has prompted many regulations, from FDA standards to SEC rules, to ensure the technology’s ethical and safe deployment. Fortunately, insurance plays a pivotal role in assisting AI companies in navigating this intricate regulatory landscape.
Furthermore, insurance companies can help companies to develop risk management plans, conduct compliance audits, and provide training on relevant regulations. By offering tailored coverage solutions for AI companies, insurers are protecting businesses and supporting innovation that can thrive without the undue burden of potential regulatory pitfalls.