AI explained: AI in the UK insurance market

Laura-May Scott and Emily McMahan navigate the intricate relationship between AI and professional liability insurance, offering valuable insights and practical advice for businesses in the AI era. Our hosts, both lawyers in Reed Smith’s Insurance Recovery Group in London, delve into AI’s transformative impact on the UK insurance market, focusing on professional liability insurance. AI is adding efficiency to tasks such as document review, legal research and due diligence, but who pays when AI fails? Laura-May and Emily share recommendations for businesses on integrating AI, including evaluating specific AI risks, maintaining human oversight and ensuring transparency. ----more---- Transcript: Intro: Hello, and welcome to Tech Law Talks, a podcast brought to you by Reed Smith's Emerging Technologies Group. In each episode of this podcast, we will discuss cutting-edge issues on technology, data, and the law. We will provide practical observations on a wide variety of technology and data topics to give you quick and actionable tips to address the issues you are dealing with every day. Laura-May: Welcome to Tech Law Talks and our new series on artificial intelligence. Over the coming months, we'll explore the key challenges and opportunities within the rapidly evolving AI landscape. Today, we will focus on AI in the UK insurance market. I'm Laura-May Scott, a partner in our Insurance Recovery and Global Commercial Disputes group based here in our London office. Joining me today is Emily McMahan, a senior associate also in the Insurance Recovery and Global Commercial Disputes team from our London office. So diving right in, AI is transforming how we work and introducing new complexities in the provision of services. AI is undeniably reshaping professional services, and with that, the landscape of risk and liability. Specifically today, we're going to discuss how professional liability insurance is evolving to address AI-related risks, and what companies should be aware of as they incorporate AI into their operations and work product. Emily, can you start by giving our listeners a quick overview of professional liability insurance and how it intersects with this new AI-driven landscape? Emily: Thank you, Laura-May. So, professional liability insurance protects professionals, including solicitors, doctors, accountants, and consultants, for example, against claims brought by their clients in respect of alleged negligence or poor advice. This type of insurance helps professionals cover the legal costs of defending those claims, as well as any related damages or settlements associated with the claim. Before AI, professional liability insurance would protect professionals from traditional risks, like errors in judgment or omissions from advice. For example, if an accountant missed a filing deadline or a solicitor failed to supervise a junior lawyer, such that the firm provided incorrect advice on the law. However, as AI becomes increasingly utilized in professional services and in the delivery of services and advice to their clients, the traditional risks faced by these professionals is changing rapidly. This is because AI can significantly alter how services are delivered to clients. Indeed, it is also often the case that it is not readily apparent to the client that AI has been used in the delivery of some of these professional services. Laura-May: Thank you, Emily. I totally agree with that. Can you now please tell us how the landscape is changing? So how is AI being used in the various sectors to deliver services to clients? Emily: Well, in the legal sphere, AI is being used for tasks such as document review, legal research, and within the due diligence process. At first glance, this is quite impressive, as these are normally the most time-consuming aspects of a lawyer's work. So the fact that AI can assist with these tasks is really useful. Therefore, when it works well, it works really well and can save us a lot of t