Medical indemnity underwriter Tego Insurance plans to develop a product addressing risks created through the use of artificial intelligence at work.

It warns if traditional liability policies begin excluding AI-driven errors, clinicians and healthcare organisations could face significant exposure.

CEO Eric Lowenstein says AI is “underpinning whole industries” as it becomes embedded across operations, and insurance will need to keep pace. 

Tego is in early talks with insurers about designing a policy.

“Traditional products simply won’t be able to absorb AI-driven exposures indefinitely, which is why the shift toward standalone AI cover is inevitable,” Mr Lowenstein said.

“It won’t be long before we start seeing broad AI exclusions written directly into professional indemnity, malpractice and liability policies.

“The industry needs to get ahead of this now rather than wait for gaps to appear after a claim.” 

Standalone AI insurance could emerge in the next 12–24 months as AI becomes embedded across clinical practice and administration, he says.

Currently, product liability policies may respond if an AI-enabled device or software causes harm, while technology errors and omissions policies can cover developers for faulty algorithms.  

Examples of exposures from use of AI include misdiagnosis; incorrect radiology or pathology interpretations; treatment delays caused by scheduling systems; and medication errors linked to algorithm-generated prescribing.

Other risks are AI rostering, patient management or workflow tools, privacy breaches, and liability claims arising from staff use of AI assistants.  

For now, property or cyber cover may respond to physical damage from malfunctioning AI-controlled medical equipment, and network outages or corrupted data resulting from hospital system failures, plus AI-generated coding errors within critical software.

Directors and officers cover may help boards liable for inadequate oversight if AI failures result in patient harm, and clinical trials insurance may apply to AI-driven drug discovery or experimental treatments.