You can now buy insurance for AI ‘hallucinations’ in the UK
Specialised insurance company Armilla has launched a new insurance policy to cover legal claims by customers or third parties caused by malfunctioning artificial intelligence (AI) relating to chatbot errors and ‘hallucinations’.
The insurance is designed specifically to cover situations where the AI has performed below expectations as a result of a decline in the performance of the product over time (known as ‘model drift’ or ‘model collapse’).
Model drift can happen due to various factors, including:
- Real-world data evolving so that the data that the model was trained on no longer accurately represents the current situation;
- Changes in the underlying relationships between input and output variables, making the model less reliable;
- The model’s own internal mechanisms;
- Model collapse, where the model relies too much on patterns in its own outputs rather than on human-generated data;
- Data pollution, where the increasing prevalence of AI-generated content online makes it more difficult to find high-quality, human-generated data for training, which can lead to a decline in model quality;
- Unintended consequences of updates.
The new policies are designed to cover some such errors, which historically have been difficult to insure. This includes everything from chatbots swearing at customers to incorrectly accusing high-profile individuals of committing criminal damage
Commenting on the announcement, legal firm Browne Jacobson noted that the launch of specialised insurance is a positive move as it should encourage more companies to adopt AI.
“Some insurance for AI-related losses is already available, however, these typically have low limits and very often do not cover losses caused by model drift,” the firm said.
“This latest product development is an important and exciting step for the insurance industry and may well hail a new era of AI-focused insurance products. As ever with the development of new products, very careful underwriting and policy drafting will be the key to success.”
