4 ms·

Insurance tech guy here. This is not the revolutionary new type of insurance that it might look like at first glance. It's an adaptation of already-commonplace

• omoikane 1y ago
  Was it also commonplace to have insurances covering human errors? For example: > A tribunal last year ordered Air Canada to honour a discount that its customer service chatbot had made up. If a human sales representative had made that mistake instead of a chatbot, I wonder if companies will try to recover that cost through insurance. Or perhaps AI insurance won't cover the chatbot for that either?
  • loeber 1y ago
    Yes, this is called Professional Liability or Errors & Omissions insurance. It's an important insurance category, but limited in market size. It's uncommon to have e.g. human sales representatives covered for this, but your doctor, lawyer, accountant, architect, etc. will all carry this kind of insurance.
    • kayodelycaon 1y ago
      I worked in this market for a few years. It was fascinating. I still have some ACORD documentation from that. I learned very quickly that standards aren’t. :)
    • kjs3 1y ago
      I carried E&O for years as an independent consultant. I fortunately never had to use it, but I have peers whose financial future was probably saved by having it.
      • SoftTalker 1y ago
        How is it priced? I was always under the impression that it was prohibitively expensive for one-person operations.
        • jabroni_salad 1y ago
          When I got quotes a couple years ago it was around $90-120 USD per month from most of the providers for a solo operator IT consultant.
    • notahacker 1y ago
      The key bit is why those niches have it: typically either regulators require it or clients require it (sometimes specifying it to a given value in their contract). And that's because the consequences of mistakes some professions make can be very expensive relative to the size of their business. Also helps that a lot of the errors they cover are very rare so pooling the risk as insurance makes more sense... cf an airline chatbot agreeing to an inappropriate refund or giving wrong advice that leaves the airline deciding to apologise and pay their holiday-related expenses. Those are costs it makes more sense for the airline to eat than get their insurers to price up (unlike other aviation insurance which can be for eye-wateringly large sums) even if it happens several times a month (which if your chatbot is an LLM supposed to handle a wide variety of questions it probably does). Same goes for the human sales representatives who may work with higher-stakes relationships than chatbots but the consequence of their error is usually not much bigger than issue refund or lose client relationship I guess chatbots/LLMs will end up as a special case for professional indemnity insurance in a lot of those regulated firms as lawyers/accountants start to use them in certain contexts.
      • willyt 1y ago
        Yes. I would say it probably makes more sense that whoever designed the chatbot system for the airline will need indemnity insurance. Then the airline has somewhere to go if it starts giving out free plane tickets willy nilly.
      • gblargg 1y ago
        Good point about risk versus pool size. An airline can "self"-insure if it's a common error, since there's no uncertainty as to whether it will happen in any given month. Insurance can't magically make it cost them less, and there's very little risk in covering the costs themselves. With a high-cost possibility that's rare, they can't tie up the huge sum of money for something that will probably never happen to themselves, so insurance is superior.
    • deleted 1y ago
      [deleted]
  • dghlsakjg 1y ago
    The Air Canada case is interesting since it predates LLMs. If you read the details it was basically the chatbot had been programmed to respond to point at a policy that for some reason differed from what Air Canada claimed was its actual policy. Nothing was made up, Air Canada simply had two contradictory policies based on where you were on the site. A customer trusted the policy that the chatbot provided to make a decision, and the tribunal said that it was reasonable for the customer to make a decision based on that policy, and that the airline had to honor that policy.
• em-bee 1y ago
  while i am not a fan of the AI craze, and regardless of what i think of the practices of certain insurers, my first thought was that the current state of AI naturally lends itself for insurance. there is a chance that AI gives you a right or wrong answer. and a lesser chance that a wrong answer will lead to damages. but risk averse users will want to protect themselves. so as long as the income insurers make is higher than the payouts, it's a sound business model.
  • bpodgursky 1y ago
    It's also easier in many ways than insuring against employees because the insurance company can evaluate a precise model and insure against it, as opposed to employees where the hiring bar can vary.
    • Retric 1y ago
      Doing that kind of analysis is expensive for the insurance company. Insurance generally offsets low precision with higher premiums and a wide range of clients. 1 employee has a lot of variability but 100,000 become reasonably predictable.
      • parpfish 1y ago
        But what if all 100,000 employees are exact copies of each other because they’re all the same ai chatbot?
        • Retric 1y ago
          > Doing that kind of analysis is expensive for the insurance company. < Sorry couldn’t resist.
        • bigbuppo 1y ago
          Well in that case it's like building a home in Firemud Hurricane Valley Bottoms, you're either paying $∞-1 for coverage, or not getting coverage.
      • 1y ago
• trod1234 1y ago
  How would any insurance company even begin to control costs on this? It seems like a fast-track to insolvency. AI models hallucinate, and by their blackbox nature can't have any kind of safeguards put in, as has been evidenced by the large number of paths in research to prompt jailbreaking. Inherently also, AI is operating on a non-deterministic environment, but its architecture for computation is constrained by determinism and decide-ability. The two are foundationally incompatible for reliable operations. Language is also one of those trouble areas since the meaning is floating. It seems quite likely that a chatbot will get stuck in a infinite loop (halting problem) with the paying customer failing to be served, and worse the company involved imposes personal cost on them in the process (in frustration and lack of resolution). If the company involved eliminates all but that as a single point of contact, either in structure or informal process; I don't see any way you can actually control costs sufficiently when the lawsuits start piling up.