Page 9 - March 2022 Issue 604 Part 2

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Seventh Panel: In the AI of the Storm – risks for the insurance industry

Re/insurers are blissfully unaware of their growing exposure to AI-related liabilities, warned Olivia Darlington Solicitor and Head of Insurance – Middle East
& Africa, Simmons & Simmons. As we stand on the verge of an AI revolution, Darlington considered some of the risks for insurance companies using AI in
their underwriting practices and 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 Associat at Simmons & Simmons. This
is due to the nature of artificial intelligence 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 use of AI may mean insurers and reinsurers are inadvertently falling foul of equality laws, among other things, because of
how their systems determine risk selection and pricing.
Saxon East Session Moderator, Global Reinsurance, said AI was akin to silent cyber in the sense that many carriers and reinsurers do not yet realize 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, he thought.

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173 AL BAYAN ECONOMIC MAG - ISSUE 604 - MARCH 2022