U.S. and international businesses are accelerating their use of artificial intelligence (AI)[1] at an unprecedented rate. The second AI Index Report published in December 2018 by a Stanford University-led group concluded that “AI activity is increasing nearly everywhere and technological performance is improving across the board.” The AI Index Report further found that “the number of AI startups has seen exponential growth” and that “[f]rom 2013 to 2017, AI VC [venture capital] funding increased 350%.” Growth in this area will continue and will infiltrate every imaginable industry: from assisting doctors in detecting lung cancer to the use of self-driving trucks to deliver mail, AI is the New Frontier.

As businesses race to implement AI solutions and processes that may improve efficiency and lower costs, AI will also create new and ever-evolving risks. And when a company’s AI fails to perform as expected, or AI is breached or manipulated in a cyberattack, new and thorny questions about how to apportion liability for resulting losses emerge. The question only becomes thornier when it is a company’s supplier, contractor, or service provider that experiences a breach or failure.

It will be difficult to apply traditional tort liability schemes to AI-related loss scenarios, but there is no doubt that AI will change the way we look at the insurability of losses. Nonetheless, for businesses that use, or are considering using, AI, either directly or indirectly, there are concrete steps those companies can take to enhance their insurance and risk management programs to mitigate against the threat of AI-related loss. Although coverage needs vary from company to company and should be assessed on an individual basis, a non-exhaustive list of threshold issues to consider are as follows:Continue Reading Artificial Intelligence: The New Frontier for Assessing Insurance Coverage