What's Happening?
Professional indemnity (PI) insurers are increasingly questioning construction firms about their oversight of artificial intelligence (AI) usage. Miller Insurance has noted that insurers are concerned about risks related to governance, data security, and intellectual property issues associated with AI. The scrutiny comes as AI technology becomes more prevalent in construction, with firms using it for design, planning, and risk forecasting. Insurers are particularly interested in how generative AI is employed, given its potential to introduce design errors and negligence. The Chartered Institute of Building has advised treating AI as a 'new colleague' to enhance productivity and efficiency.
AD
Why It's Important?
The growing focus on AI oversight by PI insurers highlights the evolving landscape of risk management in the construction industry. As AI becomes integral to operations, firms must ensure robust governance and data security measures to mitigate potential liabilities. This scrutiny reflects broader industry trends towards digital transformation and the need for comprehensive risk assessment frameworks. Companies that effectively manage AI-related risks may benefit from competitive insurance premiums, while those lacking oversight could face increased costs and limited coverage options.
What's Next?
Construction firms may need to enhance their internal governance and quality-control processes to address insurer concerns. The industry could see a shift towards more stringent contractual requirements for PI limits, particularly from public sector bodies and tier-one contractors. As AI technology continues to advance, firms will likely invest in training and resources to optimize its use while safeguarding against associated risks. The ongoing dialogue between insurers and construction companies may lead to new standards and best practices for AI integration.
