PI insurers question use of AI in construction
Professional indemnity (PI) insurers have started quizzing construction firms as to whether they have sufficient oversight of artificial intelligence (AI) use in their businesses, a broker has said.
Miller Insurance highlighted the emerging issue in a review of the London construction market.
While there has been much talk of AI technology improving efficiency and accuracy in the building sector, it said concern has grown among insurers about risks relating to areas including governance and data security.
“Proposals now often include questions about AI, reflecting concerns over intellectual property issues, design errors and potential negligence from inadequate oversight,” the broker said.
According to Miller, insurers are particularly keen to look at how construction firms use generative AI in design, planning and risk forecasting.
AI use has soared in popularity in recent years as the technology has improved, including in construction. Last month , Balfour Beatty announced a £7.2m investment in Microsoft’s 365 Copilot AI tool, which runs alongside applications such as Outlook and Excel, as part of a digital transformation strategy.
The contractor said it aimed to boost productivity and site safety through automation and better decision-making.
Guidance issued by the Chartered Institute of Building (CIOB) last year urges construction workers to treat AI as a “new colleague”.
The document says AI offers the opportunity to improve everyday working patterns, and CIOB encourages staff to “Treat AI as your new colleague, your construction assistant, potentially removing the burden from often repetitive data tasks.”
It advises: “Work out where it can provide complementary analytical skills, pattern recognition, consistency and increased processing speed.”
According to the Information Commissioner’s Office , which regulates around data laws, AI systems have the potential to “exacerbate known security risks and make them more difficult to manage”.
Companies have duties to process personal data in a way that ensures it is not unauthorised or unlawfully processed, and this can be made harder when using AI systems.
In January, the Department for Science, Innovation and Technology published advice to guard AI systems against cybersecurity threats.
Elsewhere in Miller’s half-year overview, it said “robust” capacity and “good” appetite among PI insurers to provide cover was fuelling competition and driving premiums down.
A half-year report by Gallagher, another broker, released last month, also said heightened competition was pushing down rates.
Miller warned that issues remain for smaller companies, however.
“With improving market conditions, there has been a clear trend towards higher contractual requirements for PI limits, especially from public sector bodies and tier-one contractors,” it said.
“This is putting pressure on some consultancies and specialist subcontractors to significantly increase their cover to stay eligible for tender opportunities.”
It said that businesses that demonstrated strong internal governance, robust quality-control processes and clear supply chain diligence would get better deals.
Earlier this year, Construction News explored whether changes introduced under the Building Safety Act 2022 could lead to the PI insurance market grinding to a halt, as it did in the aftermath of the 2017 Grenfell Tower fire.
Commenting on the impact of the act, Miller said: “Early disputes suggest that safety-compliance failures may constitute breaches of professional duty, possibly triggering PI claims.
“These cases will shape future interpretations of coverage, particularly regarding exclusions tied to known risks and regulatory breaches.”
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