Insurers face new risk exposures amid increased artificial intelligence adoption across industries, a Swiss Re Institute report warns. 

“AI investments are reshaping insurance risk pools and demand … the surge in investment in AI-related assets, from hyperscale data centres to high-performance computing farms, is creating sizable new insurable exposures,” the report says.

“In the near term, insurers can expect uplift in premium volume from new asset classes … at the same time, AI introduces new sources of risk for insurers.”

The report says the new risk exposures include lower barriers to legal system abuse in cases of liability litigation, fraud, data biases, cyber vulnerabilities and intellectual property concerns.

“AI can amplify cyber threats through deepfakes, data manipulation and fraud, while growing reliance on a few large cloud and AI service providers increases systemic and concentration risk.”

The report warns algorithm failures or biased decision-making can result in directors and officers and professional liability claims.

“Regulatory expectations and social scrutiny are intensifying as policymakers accelerate efforts to ensure responsible AI centred on fairness, transparency, accountability and robustness.

“Unfairly discriminatory outcomes may trigger litigation and enforcement actions, raising important questions around ownership and data rights.

“Because AI risks rarely align with traditional policy boundaries, incidents such as algorithmic errors or cloud outages can simultaneously affect multiple lines – cyber, liability and business interruption – creating complex claims scenarios and potential accumulation risk.”

The report adds: “Over time, we see AI-driven disruption reallocating rather than adding demand for insurance, likely requiring active portfolio and underwriting adjustment.”