Insurers Focus on AI Governance at CPA Firms as Risk Assessment Evolves
Professional liability insurers covering accounting firms increasingly view AI as a controllable risk that requires strong governance, though no major claims have emerged yet to shape how policies are priced.
Stan Sterna, senior vice president and risk control lead with Aon, which administers the AICPA Member Insurance Program, said there has been no substantive claim activity tied to AI use at accounting firms. Major litigation against accounting firms for AI-related issues has not occurred, so insurers lack concrete data on what such cases will focus on or their financial impact.
"There really hasn't been a lot of claims or large dollar amounts paid on claims," Sterna said. "It hasn't reached a level where insurers can make judgments like 'the majority of claims deal with hallucinations' or 'the majority of claims deal with software issues.'"
The pattern mirrors what happened with cybersecurity risk. Insurers recognized the threat early, but it took years of observation before specific procedures emerged and underwriters developed standardized questions about data security practices.
"It's not like that yet with AI, at least on the professional liability framework," Sterna said.
What Insurers Are Asking Now
While insurers have not yet systematized AI risk assessment, they are asking firms whether they have policies and procedures in place. Insurers want to see that firms understand the risks and have taken steps to address them.
"They're going to ask a firm about their AI policy and procedures. They want to see firms are approaching the use of AI with the same basic risk management protocols that they would have in place for engagement letters or client acceptance and continuation or documentation," Sterna said.
John Raspante, director of risk management for professional liability insurance firm McGowan, said insurers broadly recognize AI as something that carries risk, not something that reduces it. Despite public enthusiasm about the technology, it remains novel.
Data confidentiality ranks as a primary concern. Exposing client information through cloud-based AI tools poses a threat, even as most firms have data protection procedures in place. The reliability of AI for tax preparation and research also requires scrutiny.
"CPAs should be vigilant in not allowing AI search results to be shared with clients until it is corroborated with traditional tax research methods," Raspante said.
Disclosure and Governance as Best Practice
McGowan recommends that firms include language in engagement letters disclosing AI use to clients. Many clients oppose AI-assisted work, so signed disclosure is prudent. Offering clients the option to opt out of AI altogether can be part of a larger governance program.
A strong compliance program around AI might actually lower premiums, Raspante said.
Gary Florian, senior vice president of underwriting and policy services for Camico, said his company focuses less on whether firms use AI and more on how they do so. Intention and planning matter.
"Data security is critical. Additionally, accountants should treat AI output with caution and avoid relying on it without verification," Florian said.
Formalization Coming Soon
Insurers are learning fast. While AI has not yet been fully formalized into professional liability insurance risk analysis, Sterna expects that to change within a year or two.
"I wouldn't be surprised if they come up with more detailed questions and maybe even guidelines and protocols," he said. "It may be just a similar framework to what we have now in place: have a policy, communicate the policy, train people on the policy, have oversight of it and maintain and monitor it."
Human review emerged as the centerpiece of risk management. The lack of human oversight and blind reliance on AI output poses the greatest threat.
For accounting professionals managing these emerging risks, understanding AI governance and implementation protocols has become essential to both insurance requirements and professional practice standards.
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