As companies integrate artificial intelligence (AI) into core operations and product offerings, directors and officers (D&O) and ancillary lines of insurance must navigate a complex and evolving risk landscape, and will likely face substantial underwriting challenges. This article, published on the website for Risk & Insurance, discusses civil and regulatory actions relating to AI, D&O claim trends to date, and AI-specific issues that increase the potential for systemic losses.

Highlights

• Shareholder litigation: Companies using AI to power their core products face heightened expectations for growth and profitability—and higher exposure to settlement risk.
• Federal regulatory actions: We examine developments at the Securities and Exchange Commission, Department of Justice, and Federal Trade Commission.
• State AI regulation: New AI-related statutes govern a wide variety of issues.
• Shifting landscape: A graph of volume of event-driven securities class actions over the last five years shows how AI-related cases have emerged as the largest driver.
• AI washing: We discuss some examples of securities class actions involving misrepresentation, fraud, and negligence and deceptive practices.
• Impact on D&O: We offer some thoughts on how AI usage trends may affect claims costs and underwriting.

Read the full article here.