Envest Broking CEO Benjamin Goodall believes AI could transform brokers’ professional indemnity exposure, dramatically reducing the risk.

However, he warns the technology may also create new concerns that have yet to be labelled.

“I see PI risk for brokers almost becoming obsolete,” he told insuranceNEWS.com.au. “Because the reality is that a really well-formed AI model will be able to watch the advice that’s given out.

“Once the industry’s got time to fine-tune really reliable and governed frameworks around AI, I can see a time where it actually sits alongside a broker.

“I do see a real diminishing of that exposure. In the end, it’ll be good news for our PI insurers and it’s also a great end outcome for the client. They will get better advice, for sure. It gives brokers another tool to strengthen the advice we provide and ultimately deliver better outcomes for clients.”

Mr Goodall believes AI will affect PI in broking more than other industries, because brokers “take risk off”. 

“There will still be reduction in PI exposure for lots of industries, but we are such a different industry.

“We take risk off the client. Nearly every other financial service introduces risk. When [brokers] have a PI claim, it’s very rarely a critical error. It’s very rarely, ‘Oh, I just forgot to insure it.’

“They’re normally in the minutia, some of those really difficult PI claims.

“AI itself may introduce some different exposure, whether it’s more cyber or whether it’s another type of risk that we’ve yet to describe – but I’m not quite sure it’s PI per se.”

CFC Australia MD and PI expert Anita Lane told insuranceNEWS.com.au AI is unlikely to entirely remove the risk for brokers.

“There will always be a need for legal cover and indemnity against the wide range of exposures brokers can face,” she said.

But used properly, AI could reduce preventable errors by acting as “a second set of eyes” to improve consistency and strengthen documentation.

“The trade-off that brokers and businesses must recognise is that AI introduces new risks around reliance, accuracy, governance and accountability,” Ms Lane said.

“This highlights the importance of insurance that factors these additional risks through affirmative AI cover.”