America’s middle market is defined by agility and adaptability – demonstrated recently as it navigated a pandemic, supply chain upheavals and inflation shocks. Now, another transformation is taking center stage, as digital infrastructure – artificial intelligence, cloud systems, automation – shifts from an ancillary role to a core operating function.

A full 69% of middle market leaders say their companies are highly or very focused on technology investments – including implementing and upgrading AI, according to the Middle Market Indicator (MMI) spring report. The MMI polls executives (CEOs, CFOs, and other financial decision makers) from middle market companies with $10 million to $1 billion in annual revenue.

The AI Attraction

According to the survey, middle market leaders most frequently use AI to automate routine tasks and deploy advanced analytics and predictive modeling. They are clear-eyed about both the rewards and the risks of this rapidly evolving technology, viewing the top benefits as:

→ Improved operational efficiency
→ Reduced operational costs
→ Better customer experiences

They also realize potential downsides, expressing concerns about:

→ Data quality, security or privacy
→ A lack of in-house AI expertise
→ Increased cybersecurity risks/high implementation costs/concerns about the accuracy and reliability of system outputs

All of this comes at a time when middle market leaders also rank cybersecurity and digitalization and tech advancement as their top two overall risks.

Clearly, the middle market is at a crossroads: Seeking to harness AI to accelerate productivity, while well aware that this monumental technology is reshaping and escalating cyber risks.

Incoming Exposures

AI is creating new cyber risks and intensifying those already present.

Technology firms offer a preview of other AI-related exposures associated with this advancing technology. They face liability related to software performance and data misuse. These risks also extend to non-technology sectors deploying AI-driven analytics, embedded software, and cloud services. Manufacturers deploy automation and analytics; healthcare providers digitize patient data; financial services firms embed AI into customer interfaces; business services firms rely on cloud-native systems for operations.

Rising to the Challenge: Coverage Considerations for the Middle Market

As AI and digital transformation reshape the risk landscape, middle market companies are reassessing their cyber protections. Nearly half (47%) of survey respondents are considering working with their brokers and underwriters to add or increase cyber insurance.

To keep pace with technological change and evolving exposures, leaders should:

  • Review existing insurance policies to ensure coverage addresses various new risks introduced by AI.
  • Consider complementary coverages like electronic media, technology E&O, errors & omissions (E&O) and/or business interruption insurance to help address losses resulting from technology failures or operational disruptions.
  • Work closely with brokers and underwriters to identify and fill gaps in coverage as operations become more digital and interconnected.
  • Evaluate risk management controls—including scenario planning, employee training, and threat monitoring—to improve insurability and potentially reduce premiums.
  • Stay informed about regulatory changes related to AI and data privacy, as these can impact both risk and coverage needs.

As businesses adopt and expand AI, cyber protection will continue to evolve from being solely an insurance concern to becoming an integral element of strategic planning, capital allocation and operational design, further highlighting the agility and adaptability of the middle market.

Chubb partners with the National Center for the Middle Market (NCMM) to support the Middle Market Indicator (MMI). For our Mid-Year Updates and to sign up for future survey reports, click here.

 

Ryan France

EVP, Technology Industry Practices and CI Field Leader

 

 

 

 

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