From automating everyday processes to supporting decision-making, AI is being embedded in a growing range of industries and professional services. This raises an important question: if AI is involved in a claim, how will your client’s insurance respond?
Here’s how CFC’s affirmative AI language protects companies across different lines of business.
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Media
AI planning tool leads to an advertising dispute
The incident: A media buying agency uses an AI tool to help plan client campaigns. Incorrect campaign details were entered into the platform, causing advertisements to run at the wrong time.
The impact: The campaign fails to deliver the expected results, leading to lost marketing spend and commercial opportunities. The client alleges the error caused financial loss and pursues a claim.
How the policy responds: The policy covers defence costs and liabilities arising from allegations of professional negligence, including where AI has played a role in delivering the agency's services. This helps the agency manage the financial impact of the dispute.
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Management liability
Deepfake video leads to personal payment fraud
The incident: A managing director receives a video message appearing to come from a trusted business partner. The AI-generated deepfake promotes an investment opportunity and provides instructions for an urgent payment.
The impact: Believing the request to be genuine, the managing director transfers the money from their personal account before discovering that the video and investment opportunity were fraudulent.
How the policy responds: The policy can cover personal funds lost by a director as a result of a social engineering attack involving deepfake technology, helping reduce the financial impact on the individual.
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eHealth
AI-assisted diagnostic tool leads to a patient complaint
The incident: A healthcare provider uses an AI-powered diagnostic tool to support clinical decision-making. A patient claims the physician deferred to the output of the AI tool, which produced an incorrect diagnosis.
The impact: The clinician is alleged to have been clinically negligent and breached their duty of care to the patient, as well as being the subject of a regulatory investigation from their medical board.
How the policy responds: With an eHealth policy in place, the insured has protection for covered proceedings where an AI tool formed part of the healthcare services delivered. CFC supports the provider in responding and managing the complaint, helping to minimise disruption to its services.
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Professional indemnity
AI-generated recommendation results in financial loss
The incident: A professional services firm uses AI to conduct client research and make recommendations. However, as the AI-generated information is not independently fact-checked and contained inaccuracies, it results in poor advice being provided to the client.
The impact: The client alleges the advice resulted in a financial loss and brings a claim against the firm for professional negligence.
How the policy responds: The policy provides cover for defence costs and liabilities arising from claims where AI has been used in the delivery of professional services, helping the firm manage the financial impact of the claim.
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Intellectual Property (IP)
An AI developer faces a patent infringement claim
The incident: An AI software company develops a platform for creating and deploying custom AI models. A competitor alleges the platform infringed its patented natural language summarisation technology and initiated legal proceedings.
The impact: The company faces legal costs, potential damages, and the risk of disruption to its ability to continue selling its AI products.
How the policy responds: With IP insurance in place, the company has protection for covered defence costs and liabilities arising from the claim. Through specialist claims support, it secures a licence agreement that allowed it to continue selling its products without further restrictions.
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Financial institutions
An AI-powered customer platform exposes sensitive client data
The incident: An investment bank uses an AI-powered customer support tool to help clients access information and answer account-related queries. Following a prompt manipulation attack, the AI system is tricked into disclosing sensitive customer information to an unauthorized third party.
The impact: The bank faces a potential data breach, regulatory scrutiny and the costs of investigating the incident, notifying affected individuals and responding to customer concerns.
How the policy responds: With affirmative AI cover in place on the cyber section of the wording, the policy responds to covered cyber incidents involving AI systems, providing access to specialist support to help the bank manage the impact of the event. -
Cyber
Deepfake CEO impersonation leads to payment fraud
The incident: A finance employee at a professional services firm receives an email from the CEO requesting an urgent video call. During the call, the employee is instructed to make a same-day payment to a contractor. The CEO’s appearance and voice seem genuine, but both have been replicated using deepfake technology created from publicly available material.
The impact: The employee follows the instructions and sends the payment to a cyber criminal. By the time the fraud is discovered, the funds cannot be recovered.
How the policy responds: Cyber Proactive Response (CPR) is designed to cover social engineering attacks involving AI, including deepfakes and voice cloning. The cybercrime cover can respond to the misdirected payment, helping reduce the financial impact on the insured.
AI agent removes critical business system
The incident: An accountancy firm uses an AI agent to manage parts of its IT environment. The AI incorrectly determines that a critical system is no longer required and removes it, leaving employees unable to access client files, emails and business applications.
The impact: Business operations stop, client work is delayed and the firm loses income while the system is restored.
How the policy responds: CPR treats this type of AI error as a system failure. The policy can respond to covered restoration costs and business interruption losses, helping the insured restore the system and recover lost income.
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Technology errors and omissions (E&O)
Flawed AI training data leads to a discrimination claim
The incident: A technology company provides an AI-powered recruitment platform to help clients assess candidates. During a high-volume hiring campaign, a flaw in the platform’s training data causes the system to filter out qualified candidates from a particular demographic group.
The impact: A rejected candidate discovers the issue and brings a discrimination claim, alleging that the platform produced an unfair outcome. The technology company faces legal costs, potential damages and reputational harm.
How the policy responds: The policy provides cover for defence costs and liabilities arising from allegations that the AI platform failed to perform as intended, helping the company manage the financial impact of the claim.
To find out more about our affirmative AI wording, please contact your underwriter.
Please note affirmative AI coverage may not be available across all products, territories or jurisdictions. Coverage is subject to the applicable policy wording, terms, conditions and exclusions.
Legal disclaimer: These examples are intended for illustrative purposes only and not intended to address the circumstances of any particular insured.
