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The widespread use of robotics technology in many industries has created much confusion and ambiguity when an accident or incident occurs: Is it the result of an error arising from the manufacturer of the robotics hardware, firmware, software or artificial intelligence architecture? Is it a professional liability error or general liability loss?
“We've been in contact with various broker partners about their concerns regarding the robotics industry ... There is a gray area at the intersection of product liability and professional liability,” said David Kennedy, a Boston-based product development manager for Lexington Insurance Co., which created Robotics Shield as a way to streamline underwriting for the robotics industry and companies that use robotics.
The product has earned a 2016 Business Insurance Innovation Award.
According to Lexington Insurance, a subsidiary of American International Group Inc., advanced robotics and artificial intelligence systems are being deployed in a variety of industries, including health care, construction, energy, retail and hospitality, to name a few. By 2020, the field is expected to grow to $82.7 billion, according to Portland, Oregon-based Allied Market Research.
With that growth comes exposures.
According to Mr. Kennedy, as the robotics industry continues to grow, so too do claims involving bodily injury, property damage and financial loss. For example, in the situation of a “cobot,” a robot working alongside a human operator, there is the potential for a negative incident to create confusion about whether the loss would fall under traditional product liability or professional liability.
“We are really striving to eliminate that gray area at the intersection of those coverages and help eliminate disputes in the event of a claim,” Mr. Kennedy added. “This is a more holistic approach that combines exposures.”
Prior to Robotics Shield, underwriters would use a miscellaneous errors and omissions form with a technology endorsement, said Jeanmarie Giordano, New York-based chief underwriting officer for professional liability and financial lines at AIG.
“It wasn't specific to the robotics industry,” said Ms. Giordano. Policyholders “could potentially purchase other products (because) there wasn't a holistic approach to the exposure from any one market.”
Specifically, Robotics Shield brings together general liability and products liability insurance, robotics errors and omissions insurance and specialized risk management services, all specifically tailored to the robotics industry. Robotics Shield also provides single-point access to a claims team, streamlining the claims handling process.
To enhance its offerings, Lexington Insurance also has partnered with San Francisco-based Littler Mendelson P.C., a global law firm that houses its own practice group specializing in robotics technology and applications, to assist clients with complex robotics liability needs and to address the ongoing updates and information about the ever-changing nature of risk of that technology, according to Mr. Kennedy.
Alastair Malcolm, founder and CEO of Faversham, England-based XS Reserve Ltd., is no stranger to innovation, having been at the forefront of the development of excess-of-loss credit insurance coverage some 30 years ago.