- Cyber risks
Partner - London. United Kingdom
The new spring in AI is the most significant development in computing in my lifetime. Every month, there are stunning new applications and transformative new techniques. But such powerful tools also bring with them new questions and responsibilities.
Speaking earlier this year, Google’s Sergey Brin warned us of the dark side of artificial intelligence (AI) and said that “serious thought” must be given to a number of issues, including the impact on employment and the challenges of making unbiased algorithms. As AI gains more applications, the insurance industry knows it needs to keep pace in order to address the risks associated with its rise.
AI in construction
The construction industry - which was condemned to “modernise or die” by the Farmer Review in 2016 - has started to recognise that, as recommended, its R&D and innovation priorities need to embrace use of site based automation techniques, such as robotics and drones. Construction equipment firms (including JCB and Komastu) are substantially investing in automated plant and equipment that will eventually replace labour activities on site.
Drones are anticipated to become a common feature on construction sites, replacing tower cranes, helicopters and other surveying equipment to create 3D site models, monitor the works, produce progress reports and conduct building inspections.
This is just one example of how the construction industry will no longer be dependent on human experience and expertise for design, programming, site supervision and labour only activities. Not only will this reduce on-site fatal injures by replacing the work force, it will also begin to replace workers for repetitive processes and low-level tasks.
The roles of many construction professionals, contractors, sub-contractors and their suppliers will also change. In the future, the plant will replace or supplement the labour and, increasingly, the skills of the on-site plant maintenance technicians, robotics engineers and soft and hardware developers will be key to the nature of the risk being insured.
It is, however, unlikely that AI will replace all humans from construction sites in the future. This, in turn, means that humans will still be required on site to supervise the human workers and their interaction with the plant to ensure safety standards are not compromised.
These changes come in tandem with the development of single project professional indemnity policies, covering all professional service providers including contractors, architects, engineers and surveyors. In time, we are likely to see claims arising under these new policies from common errors in the AI across numerous sites, software failures causing damage and failures to adequately survey or consider hazards when creating a 3D site model.
These changes will result in the production and retention of more data. This will be another shift for the industry which currently isn’t capturing enough meaningful data to sustain a fully functional AI program.
Insurers need to be aware of gaps in cover and the possibility of picking up the substantial liabilities of the software developers; a negligent survey or flawed software has the potential to run up sizeable construction claims a few years down the line.
While AI may, in many sectors, reduce risk - and may even eradicate human error - the risk will not disappear entirely but will change. If, for example, the collapse of the steelwork on site is caused by an error in software used to programme the automated plant, will the project managers’, the manufacturers’ or the software developers’ insurance respond to the claim?
Another consideration will be the security of the increased volume of data that will be generated by the adoption of AI. This will mean that security systems and cyber cover will become even higher priorities.
As the level of human touch in programming is continually reduced, not only will questions over liability have to be re-examined but insurers will also have to consider the potential inability to insure against a pre-determined outcome. As AI moves from human input to machines learning from other machines, there may be no way of testing the risk of the final outcome.
AI offers many opportunities, including a reduction of certain risks. Insurers will need to accommodate the shift in allocation of risk and new policies will need to reflect the changes in behaviours to enable the insurance market to benefit from all that AI can offer.
Related item: Artificial Intelligence: time for Alternative Insurance?
Read other items in the Construction and Engineering Brief - November 2018