What Every Business Should Know about AI and Insurance

Artificial Intelligence (AI) is everywhere and going nowhere. From customer service chatbots to automated inventory systems, AI and automation tools are now part of everyday life for many small and medium-sized businesses, but as technology moves forward, so do the risks, and insurers are starting to take notice. There are some key questions as AI continues to play a larger and larger role in our businesses and, for most of us, these stand out as the most pressing:

 

1. How is AI affecting the insurance industry, from the standpoint of insurers and underwriters? How does it change things when it comes to your policies and your claims?

 

2. What risks does AI pose when used in your own business?

 

Let’s look at the answers.

 

1. How are insurers using AI?

Many insurers now use AI to assess risks, calculate premiums and even handle claims, which means that the data you provide - and how accurate it is - matters more than ever. For example, an insurer might use AI to scan public records, your website and even online reviews to help build a picture of your risk profile. And if you use smart tech (like leak detectors or fire alarms connected to the cloud), you could qualify for lower premiums because you’re seen as more proactive in managing risk.  

What does this mean for your business?

More accurate pricing - for better or worse

The more data you provide, the more tailored your premium can be. But it also means any gaps or inaccuracies in your information can lead to higher costs or even claims being rejected. As AI enables assessments to become more precise, businesses must take more care to ensure their data is accurate, up to date and comprehensive.  

Faster claims, but less human contact

Automation can certainly speed things up, but it can also remove some of the personal support many businesses value during stressful times. Technology is playing a bigger role in claims handling, with online portals, automated forms and AI-driven assessments streamlining the process. For simple or routine claims, this can be incredibly efficient: decisions can be made faster, and payments processed more quickly than ever before. However, when it comes to more complex claims, having a knowledgeable, human advocate makes all the difference, so it’s important to work with a broker who not only understands the technical details of your policy but can also offers genuine support when it counts.  

2. What are the new risks from using AI in your business?

If your business uses AI tools for marketing content, financial forecasting or customer service, it can certainly save you both time and money, but unfortunately there’s a very real potential for mistakes. The most common pitfalls are misinformation, copyright infringement or a customer relying on advice from an AI chatbot that goes wrong.

…Which raises the important question – if something were to go wrong, would your insurance cover you?

Often, standard business policies or professional indemnity cover won’t include issues caused by AI-generated errors. So, how can SMEs protect themselves? Here’s a useful checklist:

 

• Be transparent with your insurer about how your business uses tech and automation.
• Review your policies to check if they cover things like cyber incidents or AI-related liabilities.
• Consider cyber insurance if you rely heavily on cloud-based systems, customer data or automated processes.
• Stay up to date with how AI is regulated in your industry, as things continue to evolve quickly.

  AI really is a whole new world to navigate. It’s helping small businesses become faster, smarter and more efficient, but it also adds new layers of risk. The key is to make sure your insurance evolves alongside your business.

If you need help, or you’re not sure whether your current cover fits the way you now work, we can help you review it. At Ascend, we believe it’s better to ask the questions now than face gaps in cover when you need it most.

Call Ascend today on 01245 449060 or email matthew.collins@ascendbroking.co.uk.