It’s time for AI insurance

The pandemic has accelerated the adoption of technology for many companies. Governments are developing strategies to encourage further adoption. However, many businesses are still wary of AI and require additional reassurance to go ahead, particularly in industries where implementation is slow. AI insurance is the solution to speed up adoption, says Saar Yoskovitz, co-founder & CEO of Augury.
The pandemic has accelerated the adoption of technology for many companies. Governments are developing strategies to encourage further adoption. However, many businesses are still wary of AI and require additional reassurance to go ahead, particularly in industries where implementation is slow. AI insurance is the solution to speed up adoption, says Saar Yoskovitz, co-founder & CEO of Augury.

As the capabilities of AI solutions improve and development and implementation become easier, businesses are shifting their views and increasing the use of the technology. According to the latest data from IBM, 36% of UK companies said they accelerated AI adoption over the past year.

The pandemic has played a role in this, with businesses saying AI has helped them over the Covid-19 outbreak. The leaders in three industries – financial services, technology, and retail – are reporting significant increases in the use of the technology so far this year compared to 2020. However, the industry embracing the tech most is industrial manufacturing, with over 93% of companies having at least functioning AI integrated into their business.

Although AI is clearly an exciting development, business leaders have sounded caution about the new technology’s speed. Some say that AI adoption is actually moving too fast. To achieve improved confidence and, ultimately, efficiency in using AI, businesses need reassurance that risks can be mitigated before rolling out the technology on a global scale.

Governments around the world have started to develop strategies for AI, focussing on ways to install guardrails to protect people’s personal data and ensure the technology is only used to benefit society. For example, the UK has its National AI Strategy released in March 2021, to grow the economy through wider use of AI. The European Commission has shared its strategy, outlining proposals that “unacceptable” uses of AI will be banned, and companies in breach will be hit with large fines. This approach is winning trust among AI researchers and academics, which should help build confidence among businesses.

These steps are to be welcomed. However, more efforts will be needed for businesses using AI in commercial settings before they feel fully comfortable implementing large-scale rollouts. Like humans, AI systems sometimes make mistakes that result in real-world losses. So potential customers need reassurance to spur adoption. The benchmark for the successful scaling of AI has risen, as systems are now required to add value during difficult business conditions (such as the current pandemic) and during normal working times. 

The need for reassurance is particularly relevant in industries where the implementation of AI solutions has been slow. Analysis of global manufacturing companies suggests 74% of manufacturing businesses are stuck in ‘pilot purgatory’ – having not yet successfully scaled digital transformations as part of the wider industry 4.0 movement. AI will play a key role in this next industrial revolution.

For manufacturing companies looking to balance the implementation of AI with trust in the system, what can be done? Do AI vendors guarantee the accuracy of their algorithms? Do insurance companies cover the risks associated with AI products?

Insurance companies have quantified and mitigated new types of risk for centuries, and there’s no reason this trend shouldn’t continue with AI. More broadly, insurers can help enterprises at three stages of AI adoption by:

Choosing an AI solution

Many vendors offer AI solutions. Which ones can enterprises trust to work for a particular use case? For example, the industrial sector has been slow to adopt AI technology at scale due to inexperience and perceived AI risks. Insurers who perform due diligence on specific AI solutions and then back validated solutions with specific products can become trusted advisers.

Deploying an AI solution

Once an AI solution is deployed, what if it doesn’t deliver the promised outcomes? What if it makes mistakes that result in losses? Again, insurers have the skills to validate that a particular solution delivers results in production and can reimburse customers if they suffer losses when a solution does not perform as expected. In this scenario, the interests of the insurer, AI vendor and enterprise customer all align.

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Scaling AI solutions

As the tech becomes more widely used within enterprises, AI solutions will make many high-risk decisions, potentially with less human oversight. This increases AI risks and makes insurance even more crucial to support scaling up adoption.

Insurance can help mitigate the risks to enterprises of deploying AI at scale and improve business trust in the technology. This will help businesses concentrate on maximising the benefits provided by the technology.

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Author

  • Insurance, AI, It’s time for AI insurance

    Saar Yoskovitz is co-Founder & CEO of Augury, an AI-driven machine health diagnostic platform that offers the world’s first AI insurance policy - Guaranteed Diagnostics. Augury has partnered with one of the largest reinsurers of industrial equipment, HSB, to provide cover up to $100,000 for the cost of equipment repair or replacement if the AI system fails to detect a malfunction and alert the customer.

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