At a glance
- As AI evolves, insuring against potential indemnity issues grows more important.
- From questions over accountability to data privacy risks, there is a lot to consider.
- Accountants have a role in identifying the risks to ensure clients’ insurance is up to scratch.
With all eyes on the DeepSeek news, it’s more important than ever that companies properly consider exactly how they are using AI, and how they are protecting themselves from its evolving risks. A considerable part of this will be carefully evaluating whether their existing PII policies adequately cover emerging challenges.
Accounting professionals have a key role to support clients in identifying the risks of using AI, considering whether their existing insurance arrangements are suitable, and if not, advising on PII cover that fits their needs.
We speak to PII experts about the steps accountants should take to ensure their clients – and themselves – are covered when it comes to AI.
Keep an eye on data quality
The quality of the data used to train and operate AI tools is key – AI tools are only ever as strong as the data that feeds them. Using AI introduces risks like inaccurate data, biases and misinformation, and without proper analysis and verification, information from an AI tool can be unreliable.
Phil Parkinson, head of commercial law and data issues at Taylor Rose, says: “There have been many cases where the content used by AI is scraped from different sources at once, collecting data which is then used for an entirely different purpose, resulting in misleading and false positive information.”
Accountants should work with clients to be aware of the various sources from which AI takes its information, and verify its output. PII coverage will need to be carefully evaluated in relation to the quality of data clients use to avoid financial, legal, and reputational risks.
Assess the scope of the risk
Assessing and tracking the scope of AI deployment in a company is essential, says Simon Mantell, Partner, Professional & Financial Risks at Lockton. “As AI evolves, PII insurers will ask more questions and seek to learn more about the legal and regulatory risks.”
Mantell says accountants should work with clients to develop internal policies and procedures for AI use. They will need to understand the extent of AI deployment, considering their PII coverage in terms of both the technology and the outputs it produces.
“From a PII perspective, the concern is less about AI as a technology – it is after all, just another piece of software in a firm’s tech suite – and more about its impact on service delivery and whether insurers will view these as covered liabilities under existing policies.”
Implement policies to encourage ethical use
For Laura Court-Jones, Small Business Insurance Editor at Bionic, companies should adopt a company policy framework to encourage staff to use AI tools to the company’s benefit, within set boundaries and training procedures.
She adds: “To ensure that AI tools are being used properly, businesses should require training for all of their employees to communicate clearly how AI should be used in the correct manner.”
There should be in place a clear contractual agreement around the use of AI that both parties are happy with, within the boundaries of their PII cover. Professionals and companies alike should ensure they know exactly what is covered under their policy, and check their policy documentation for their own terms and conditions.
Keep evidence of all use of AI across the company
To hedge the risk of PII claims against them, businesses should be working with accountants to review AI tools before inputting any data, and keeping records of how they’ve used tools as evidence.
Given the inherent time lag between the act and discovery of a claim or potential claim, it is important that the capability of the AI platform at the material time is well documented. Mantell says: “Logging the data, logging the changes over time, and better understanding that internal process is going to be very important moving forward.”
Accountants themselves aren’t immune
Court-Jones says it’s important to remember that AI should not be used as a replacement for accountants’ own professional judgement. AI can’t provide the expertise and industry knowledge that accounting professionals can, and over-reliance on it could expose clients to risks.
For example, an accountancy firm might use an AI tool to analyse a company’s finances and generate its tax return. If the AI tool misinterprets the data it is fed, and the figures aren’t checked sufficiently, it could lead to errors in the tax filing. Any financial impact for the client will then be passed on to the accountant.
“As AI evolves, PII insurers will ask more questions and seek to learn more about the legal and regulatory risks.”
Simon Mantell, Partner, Professional and Financial Risks at Lockton
To counter cases like this, Court-Jones says: “Clients who work with accountants and others in professional services should ask for transparency on the use of AI tools and understand the risks associated with working with someone who uses it.”
As AI adoption accelerates, safeguarding against financial and legal impacts becomes more pressing. Assessing both clients’ and their own PII to make sure AI-related risks are covered should be a key consideration for accountants.
For more discussion of how accountants should be responding to the ever-changing AI and emerging technologies landscape, join our upcoming IFA AI and emerging technologies conference on Thursday 6 March 2025.
