AI: New products for new risks

DAXEL did not want to miss the Dragons' Den Pitch organized by Lloyd's Lab Futureminds, led by Iryna Chekanava. This Lloyd's Lab-driven project focused on developing insurance products that cover the risks associated with Artificial Intelligence (AI).

The growing interest in AI and its associated risks reflects the accelerating adoption of AI-driven models and technologies in the insurance industry. Although insurance products designed to mitigate these risks are in early stages, their crucial role in AI implementation and regulation is undeniable.

Dragons' Den Futureminds, as an innovation program, aims to enable emerging insurance professionals to access the tools and skills necessary to develop ideas from the identification of client problems to the presentation of validated product concepts. The ultimate purpose is to create validated insurance products with the potential to be incubated and tested in the insurance market.

The Futureminds Dragons' Den session provided a venue for us to learn about five new tools developed by the working groups during the program. These innovative products address key aspects of the risks associated with AI:

- Team 1 - Developed AI catastrophe bonds for AI failures and non-aligned performance with the goal of influencing a shift towards effective AI risk management and actively contributing to the development of pro-human AI.

- Team 2 - Presented a smart manufacturing and risk transfer solution, offering product recall coverage for manufacturing companies using AI models/software in their manufacturing process.

- Team 3 - Devised a risk engineering solution to support customers in understanding and securing the risks they take with the use of AI.

- Team 4 - Proposed a solution for potential labor displacement as the use of AI increases, to support those affected, either through government or business.

- Team 5 - Presented a use case for the risks arising from the use of AI to support valuations in the market for species with increasing frequency.

The session also provided an opportunity to deepen the understanding of the risks associated with AI, thanks to the intervention of Marco Io Giudice, Head of Emerging Risk at Lloyd's. According to his comments, AI risks underline the need to proactively adapt to constantly evolving challenges, emphasizing that "New risk demands new products". This strategic and forward-thinking approach is essential to address emerging risks in the insurance and cybersecurity sector.