General Insurance Article - Is your business suffering from AI hallucinations


The Head of Cyber at Towergate Insurance, Marc Rocker, has issued a warning about the effect of AI hallucinations and highlights some alarming issues for firms using this technology. Mr Rocker said: “Despite the name, AI doesn’t think for itself - it simply draws from the data that has been inputted into it. Therefore, if the data is wrong, the AI will use this flawed information to draw a false conclusion, resulting in an ‘AI hallucination’.

 “An AI hallucination is when the AI generator produces an answer that is completely incorrect but may appear plausible. Often, the confident tone of the AI bot will lend credence to this incorrect answer. AI chatbots have been known to fabricate historical records, falsely accuse people of harassment, and even to claim to be in love with a journalist!”
 
 While such errors are often accidental, sometimes these hallucinations are caused by deliberate, targeted attacks on the AI. Businesses on the receiving end of these attacks could end up believing negative or false facts about their operations.
 
 Vigilance and double-checking are vital
 
 It is important to be vigilant when using AI for business content. Incorrect information has the potential to not only damage corporate reputations and customers’ trust, but it can also impact brand authority and even pose serious risks, if, for example, it is being used in a medical setting.
 
 Marc Rocker says: “When using AI, make sure that all the information it supplies is double-checked by searching the web and ignoring AI-generated results. Always use reputable sources to verify the data supplied by AI, before any of it is distributed. Ultimately, human fact-checking remains crucial when handling any information supplied by AI.”
 
 The importance of cyber insurance
 
 Mr Rocker concludes: “Using AI for your business is not without risk. Not only can it pose the risk of misinformation, but inputting data into an AI bot is questionable because it leaves you vulnerable, as you don’t know where it is going, who will see it or where it is stored. While taking sensible precautions is very important, the final element is to have Cyber insurance that can protect you against these risks so that, if something does go wrong, you’ll be covered.”
  

Back to Index


Similar News to this Story

Is your business suffering from AI hallucinations
The Head of Cyber at Towergate Insurance, Marc Rocker, has issued a warning about the effect of AI hallucinations and highlights some alarming issues
Reputation Risk Events can reduce shareholder value
Aon has released its 2025 Cyber Risk Report, revealing that cyber events that cause reputation risks can result in an average of 27 percent drop in sh
Air India plane crash to harden aviation reinsurance market
The fatal crash of Air India flight AI171 on June 12, 2025, has become a pivotal moment for the already tightening global aviation reinsurance market.

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.