Life Insurance Australia :: News
SHARE

Share this news item!

Potential AI Errors: A Looming Challenge for Insurers

Potential AI Errors: A Looming Challenge for Insurers

Potential AI Errors: A Looming Challenge for Insurers?w=400

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Industry experts are signaling a potential risk for underwriters due to claims arising from inaccuracies produced by artificial intelligence (AI), likening it to the "silent cyber" phenomenon of the past.
Clyde & Co partner, Darryl Smith, highlights the issue, emphasizing how AI inaccuracies could impact various insurance policies, sometimes without immediate detection.

The comparison to "silent cyber" recalls previous instances when insurers faced substantial losses because cyber incidents like ransomware were unintentionally covered by non-cyber policies. Mr. Smith advises that policy proposal and renewal forms should scrutinize the use of AI by asking specific questions about its application and purpose.

While AI is becoming integral to a wide array of professional services, its reliability varies, and errors can lead to significant insurance claims. These concerns mirror those previously seen with cyber risks, and although solutions such as exclusions might deter policyholders, they could also lead to new opportunities for tailored coverage solutions.

The potential vulnerabilities mainly threaten professional indemnity and errors and omissions policies, as errors often remain unnoticed for extended periods, potentially intensifying the impact of claims. Furthermore, directors’ and officers’ policies may also face risks of claims related to intellectual property breaches, defamation, or misuse of personal information.

In the future, the insurance sector might evolve to establish dedicated AI policies, minimizing unforeseen exposures similar to the asbestos precedent, which, despite not receiving any premiums, resulted in substantial costs to insurers. AI remains a pervasive factor within numerous organizations, and any associated errors could lead to significant claims.

In navigating this landscape, insurers are encouraged to proactively address these issues and explore new insurance policy structures to safeguard against unanticipated AI-related claims.

Published:Thursday, 24th Apr 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Surge in Mental Health Claims Reshapes Australia's Insurance Landscape
Surge in Mental Health Claims Reshapes Australia's Insurance Landscape
02 Dec 2025: Paige Estritori
Australia's insurance industry is experiencing a significant shift as mental health conditions have become the leading cause of total and permanent disability (TPD) claims. Recent data from the Council of Australian Life Insurers (CALI) indicates that mental health issues now account for nearly one-third of all TPD claims, marking a substantial change in the industry's claim patterns. - read more
Australian Insurance Premiums See Notable Decrease
Australian Insurance Premiums See Notable Decrease
02 Dec 2025: Paige Estritori
Recent data indicates a notable decline in life and income protection insurance premiums across Australia, providing consumers with more affordable coverage options. According to the latest Direct Life Insurance Report from Rainmaker Information, direct life premiums have decreased by 7% since 2024. Similarly, direct income protection premiums have seen significant reductions, with average premiums for waiting periods of 30 days and 90 days decreasing by 12% and 13%, respectively. - read more
TAL's Health Sense Plus Now Covers Income Protection Policies
TAL's Health Sense Plus Now Covers Income Protection Policies
02 Dec 2025: Paige Estritori
In a significant development for policyholders, TAL has expanded its Health Sense Plus program to encompass income protection (IP) policies. This initiative, effective from August 8, 2025, aims to incentivise proactive health management by offering premium discounts to clients who engage in preventative health checks. - read more
Northern Australian Marinas Appeal for Government Support Amid Escalating Insurance Costs
Northern Australian Marinas Appeal for Government Support Amid Escalating Insurance Costs
02 Dec 2025: Paige Estritori
Marina operators across Northern Australia are sounding the alarm over surging insurance premiums, with some reporting increases exceeding 300% in recent years. This financial strain is prompting urgent calls for government intervention to ensure the sustainability of the industry. - read more
Coast Insurance Announces New Co-CEOs to Propel Strategic Growth
Coast Insurance Announces New Co-CEOs to Propel Strategic Growth
02 Dec 2025: Paige Estritori
In a significant move within the Australian insurance sector, Coast Insurance has appointed Stephanie Muller and Jordan Brindley as Co-Chief Executive Officers. This strategic decision underscores the company's commitment to robust leadership and sustained growth. - read more


Life Insurance Articles

Life Insurance Comparison: Key Questions to Ask Your Insurer
Life Insurance Comparison: Key Questions to Ask Your Insurer
Life insurance is a crucial consideration for middle-aged to older Australians. It provides financial security for your loved ones in the unfortunate event of your death. Understanding the various options available is vital to making an informed decision. - read more
Top 5 Reasons to Consider Life Insurance While You're Young
Top 5 Reasons to Consider Life Insurance While You're Young
When you’re young, life is all about new experiences and making plans for a promising future. While factors like travel, career, and relationships often take centre stage, one aspect often overlooked is life insurance. It might seem like something to consider later in life, but starting a policy while you're young can be a savvy financial move. - read more
Understanding Life Insurance: How to Determine Coverage Amounts
Understanding Life Insurance: How to Determine Coverage Amounts
Life insurance is a cornerstone of financial planning, offering peace of mind to you and security for your loved ones. It's a contract between you and an insurance company: in exchange for regular premiums, the insurer agrees to pay a sum of money to designated beneficiaries upon your passing. This vital tool ensures that your family's financial needs can be met during an incredibly difficult time. - read more
How Pre-Existing Conditions Influence Life Insurance Premiums
How Pre-Existing Conditions Influence Life Insurance Premiums
When it comes to life insurance, a pre-existing condition refers to any medical condition or illness that you have been diagnosed with before applying for a life insurance policy. - read more
Maximize Your Safety Net: Top Tips for Optimizing Income Protection Benefits
Maximize Your Safety Net: Top Tips for Optimizing Income Protection Benefits
Welcome to a pivotal guide dedicated to empowering you with the essentials of income protection insurance in Australia. As we navigate through times of uncertainty, safeguarding your financial wellbeing becomes not just a priority, but a necessity. Income protection insurance stands as one of the key pillars of financial security, ensuring a steady flow of income during periods when you're unable to work due to illness or injury. - read more


Start Here !
life insurance
Apply now for your free Insurance assessment and price comparisons!

Start Here

Life Cover Amount:
Postcode:

All quotes are provided free and without obligation by a Specialist from our National Broker referral panel. See our Privacy Statement for more details.


Knowledgebase
Copayment:
A fixed amount you pay for a covered healthcare service, usually when you receive the service.