Happy Wednesday! In this week's Big I Buzz, we are exploring if AI is a cyber or tech E&O risk and a closer look at the volatile and growing market of personal umbrella insurance.

Underwriters’ Dilemma: Is AI a Cyber or Tech E&O Risk?

Take a look at the challenges and uncertainties faced by underwriters regarding the inclusion of artificial intelligence (AI) in cyber and technology errors and omissions (E&O) insurance policies. Panelists at a symposium highlighted the historical presence of AI but emphasized the lack of industry adaptation to its evolving risks. The difficulty lies in categorizing AI-related risks under cyber or tech E&O policies, compounded by subtle distinctions between technology usage and provision of technological services. Underwriters are urged to delve into clients' operational models to assess potential losses accurately. There are emerging concerns such as liability for AI-generated code leading to data breaches and the use of AI in manipulating audio and video streams for fraudulent activities. Despite uncertainties, there's a consensus that insurers need to adapt to AI-related risks swiftly to support emerging technologies' safe development. Read more here.

Personal Umbrella: A Look at the Volatile and Growing Market

The "2024 Property & Casualty Market Outlook" by Alera Group paints a discouraging picture for the personal insurance market, citing unprecedented losses and unprofitability in homeowners and auto insurance. This situation is affecting pricing and availability, especially in catastrophe-prone areas and states with regulatory constraints on rate adequacy. The personal umbrella market is also feeling the impact, as it follows trends in underlying insurance losses. Despite challenges, there's growing awareness of the necessity of personal umbrella coverage, leading to increased demand. However, the industrywide hard market is putting pressure on this segment, with carriers seeking rate increases due to severe losses from auto accidents and litigation. Agents play a crucial role in detailing the benefits of personal umbrella policies to clients, emphasizing the protection they provide against unexpected events and potential financial liabilities. As rates increase, consumers may consider removing products to offset costs, underscoring the importance of delivering value through personal umbrella coverage. Read more here.

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