Hiscox UK has updated its technology insurance to explicitly cover risks related to artificial intelligence (AI). The revised policy applies when a business uses AI in daily operations, builds AI models for clients, or offers AI consultancy. Hiscox is among the first UK insurers to add detailed AI clauses.
Industry Must Address AI’s Growing Risks
Adam Atkins, Head of Technology at Hiscox UK, says AI brings both opportunities and new risks. He stresses that insurers need to clearly state whether AI-related issues are covered. He added, “The need for clarity is further exacerbated by the UK government’s ambition to accelerate the uptake of AI. As more AI businesses emerge, and as businesses increasingly integrate these tools, the need for clear, comprehensive cover will only grow.”
Specific AI Scenarios Now Covered
The updated policy offers protection under its professional indemnity section. It covers situations such as:
A client uses AI to complete a contract, and it fails.
A client relies on flawed AI output and then delivers an incorrect result.
Incorrect data is entered into an AI tool, causing a contract error.
An insurer or tech firm builds an AI model for a client that falls short of agreed specifications.
A consultant recommends a particular AI tool but is later found negligent.
Additional Clauses Address Common Losses
Based on customer feedback, Hiscox has introduced four new clauses to cover typical AI-related losses:
Cyber Attacks: Breaches that affect customer systems.
Digital Disruptions: Interruptions to a client’s digital operations.
Data Loss or Corruption: Loss or damage to customer data caused by AI or related systems.
Technology Failure Leading to Injury or Damage: Claims arising when tech failures cause personal injury or property damage.
Expanded Environmental and Supplier Coverage
The updated policy also broadens coverage for environmental technologies. It now includes products designed to reduce pollution, promote sustainable development, or protect natural resources—areas previously excluded. In addition:
US customers receive automatic indemnity without policy changes.
Claims from work by overseas suppliers are now covered.
All UK acquisitions during the policy period, regardless of size, are automatically included.
Exclusions for under-resourcing, contamination, and losses tied to the Log4j vulnerability have been removed.
Pre-Claim Assistance and Expense Reimbursement
Hiscox will continue to offer pre-claim assistance. The policy now allows for reasonable expenses to resolve potential claims. If an expense helps avoid a claim, Hiscox will reimburse it even if the claim does not materialize.
AI’s Growing Role in Insurance
In the UK insurance market, AI is used for fraud detection, underwriting, claims processing, and customer engagement. As insurers and tech firms expand their AI use, issues of transparency, risk management, and regulatory oversight gain importance. Hiscox’s updated policy aims to address these concerns by providing clear, comprehensive coverage for AI-related activities.
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