The Lloyd's Market Association (LMA) has published a new report on how artificial intelligence (AI) is changing the international errors and omissions (E&O) market, warning that the growing use of generative AI (GenAI) brings both opportunities and significant new risks for insurers.
Produced by the LMA’s International Professional Indemnity Committee, the report examined how professional services firms such as lawyers, accountants and architects are increasingly adopting GenAI tools, including platforms like ChatGPT and Google Gemini, to automate routine tasks, improve efficiency and cut costs.
While these technologies can enhance accuracy and streamline workflows, the report cautioned that they also introduce new exposures for insurers. These range from liability for errors generated by AI systems, to data protection and confidentiality breaches, as well as compliance with fast-evolving regulation.
The report also offered practical guidance to underwriters, including suggested questions to better assess AI-related exposures and advice on how to adapt policy wording. It also underscored the need for transparency in the fair presentation of risk and regular dialogue between insurers, brokers and insured firms.
Chris Mather, senior executive, technical underwriting at the LMA, said underwriters must take a proactive approach as AI becomes embedded in professional services.
“AI is transforming the way professional services firms operate, but it’s essential that underwriters understand the nuances of these new risks,” he said. “Our report highlights the need for clear policy wordings and careful consideration of how GenAI is used within insured firms. Underwriters must ask the right questions to assess risk fairly and ensure coverage reflects the realities of AI-driven workflows.”
James McPartland, chair of the LMA’s International Professional Indemnity Committee and class underwriter at Dale Underwriting Partners, added that understanding the operational integration of GenAI is becoming critical.
“As the adoption of GenAI accelerates, E&O underwriters must understand how these technologies are integrated into day-to-day operations of professional services companies and ensure that coverage is fit for purpose. Collaboration between underwriters, brokers and clients will be key to navigating this evolving landscape,” he said.
The findings come as professional indemnity insurers begin to tighten policy terms to address AI-driven exposures. Some carriers are reviewing exclusions or introducing new clauses to clarify how liability applies when errors stem from automated systems. Others are enhancing underwriting questionnaires to capture how firms use AI in client services.
