UK universities & insurers launch GBP £2 million AI risk project
A partnership has been launched between academic institutions and the insurance sector to develop insurance products addressing the risks arising from the commercial use of artificial intelligence (AI).
The UKRI Prosperity Partnership titled 'AI2: Assurance and Insurance for Artificial Intelligence' brings together the University of Edinburgh, AXA, WMG at the University of Warwick, and the University of Oxford for a research programme valued at GBP £2 million. The project aims to establish sound methodologies for measuring, understanding, and insuring the risks related to deploying AI systems, particularly in high-stakes domains.
The initiative seeks to provide ways for insurers to appropriately price and underwrite AI-dependent risks in sectors such as healthcare and transport, including the use of driverless vehicles and medical technologies. This addresses the present difficulty faced by insurers due to the unpredictable behaviours and complexities associated with AI-driven solutions.
Project leaders have indicated that constructing a robust assurance and insurance framework for AI will facilitate more secure adoption of these technologies by shifting risk into the insurance sector. The structure is also expected to motivate the development of safer and more transparent AI products by offering clear economic incentives.
As AI systems become more autonomous and embedded in high-stakes environments, traditional forms of insurance are no longer sufficient. AI insurance offers a new paradigm - one that explicitly covers risks like model failure, bias, or unintended behaviour that arise even when systems function within their design parameters. More than just risk transfer, it's a mechanism to align incentives and reward those who build transparent, robust, and well-governed AI.
These were the comments from Professor Lukasz Szpruch of the University of Edinburgh's School of Maths, who leads the academic effort on the project.
The project forms part of a wider set of industry-led research initiatives focused on challenges in artificial intelligence and insurance, coordinated by the University's commercialisation service. Tobi Schneider, Financial Services and FinTech Sector Lead at Edinburgh Innovations and based at the Edinburgh Futures Institute, commented:
AI offers substantial potential benefits for society and the economy, but it also carries imminent risks. If we are to realise the benefits, we must be able to understand and mitigate the risks in tangible, applicable ways. This exciting project is one that will ultimately lead to better risk management practices and standards for AI, meaning people and businesses will be better protected from harm.
Funding for the partnership comes in part from the Engineering and Physical Sciences Research Council (EPSRC), with additional support from the participating industry partners and universities. The AI2 initiative is one of 23 new Prosperity Partnerships designed to address key challenges in industry, ranging from artificial intelligence and cybersecurity to pharmaceuticals manufacturing.
Another project under the Prosperity Partnerships scheme will involve the University of Edinburgh's EPCC working in collaboration with Rolls-Royce to use supercomputing for modelling sustainable aviation fuels.
Government support for the initiative was emphasised by Science Minister, Lord Vallance, who said:
These partnerships show the range of real-world challenges the UK's world-class research base is helping to tackle – from cutting carbon emissions in heavy transport, to improving access to life-saving medicines. By backing scientists to work hand-in-hand with industry, we're combining cutting-edge research with business expertise to turn science into practical solutions that can make a difference in people's daily lives.
From an academic-industry perspective, the role of insurance is seen as both a safeguard and a way of embedding incentives for responsibility and better governance in AI deployment. Agni Orfanoudaki, Associate Professor of Operations Management at Oxford's Saïd Business School, added:
Algorithmic insurance represents more than a financial safeguard - it offers an efficient vehicle to shape the market incentives that drive AI accountability. By linking financial coverage to measurable assurance practices, we aim to create an effective mechanism where safer AI systems become not only more trustworthy but also more economically viable. Our partnership has the potential to embed responsibility into the core economics of AI deployment, accelerating adoption while elevating the standards of algorithm governance.
The programme is set to deliver research and tools to support insurers and businesses in developing, pricing, and applying new forms of AI risk insurance, with the expectation of advancing safer deployment and governance of contemporary AI technologies across various industries.
