Technology is poised to take over traditional markets and is rapidly creating new ones. For example, this trend is evidenced by the adoption of electric vehicles, demand for solar energy and the blistering pace of generative AI adoption.

Yet these innovations also present challenges for governments and society, and potential risks for insurers as their usage grows.

An Artificial Enhancement to Cybercrime and Civil Unrest

Over the past year, generative AI tools have experienced explosive growth. Recent surveys have found that one-third of enterprises regularly use the technology in their business functions. While the technology is helping insurers enhance productivity and profitability, there are tangential risks.

Generative AI (GenAI) played a larger and more harmful role in cybercrime in 2023, notably in the application of ransomware and phishing attacks. For example, its capacity to produce convincing email copy—as with the popular WormGPT language model—in a variety of languages has made phishing attempts appear more genuine, making it harder for employees to identify fraudulent communications. These tools are also increasingly capable of mimicking voices, potentially posing a serious threat to security systems that rely on voice authentication.

Additionally, some experts are warning that GenAI tools may make it easier to produce and distribute realistic-looking disinformation, which could heighten the risk of civil unrest. For example, GenAI tools, like chatbots, can craft compelling text or email messages or automate voice calls that impersonate real political figures or celebrities. GenAI tools may also be able to automate social media campaigns replete with disinformation, targeting specific groups or individuals with content that appears genuine.

Research by Verisk Maplecroft found that the U.S. faced an elevated risk of experiencing outbreaks of damaging unrest in the year ahead, according to its new Strikes, Riot and Civil Commotion (SRCC) predictive model, particularly in major cities such as New York, Washington, D.C., and Chicago—where law enforcement is already on high alert ahead of the August Democratic National Convention.

Understanding the cyber as well as social and political risks involved with generative AI will be critical for insurers and corporations in the year ahead.

EVs and Infrastructure—A Weighty Issue

Global electric vehicle (EV) sales surpassed 10 million units in 2022, and the International Energy Agency (IEA) projects that by 2030, 20 percent of all vehicles sold in the United States will be electric. But the push to go electric has raised some concerns—namely, the public infrastructure’s ability to handle these vehicles.

A 2023 survey found that 53 percent of respondents lacked confidence in the federal government’s ability to build out the charging stations and ancillary infrastructure to support a growing EV market. And while the surge in EV sales has been accompanied by an expansion of the nation’s public charging infrastructure, consumer concerns over where exactly rubber will meet the road remain.

EVs pose another threat to America’s public infrastructure: their weight. The damage a vehicle can inflict on roads and infrastructure increases geometrically with weight, and according to the American Society of Civil Engineers (ASCE), 43 percent of the nation’s roads stand in “poor” or “mediocre” condition.

The increasing heft of America’s vehicle fleet long predates the emergence of electric vehicles, driven instead by our taste for ever-more-massive pickups and SUVs. Electric vehicles are continuing this trend, if not exacerbating it. EVs can weigh hundreds to thousands of pounds more than their conventional counterparts, thanks to their batteries and related housings. As automakers begin to electrify their pickups and SUVs, the nation’s vehicle fleet looks to get heavier still. Compounding these weighty worries is the potential toll on structures initially designed for far lighter vehicles, such as parking garages, which have already seen an increase in failure and collapse in recent years due in part to excessive loading.

Seeking Answers on Solar Panel Safety

Do solar panels significantly increase the risk of fire on a property? It’s a straightforward question that doesn’t quite lend itself to a straightforward answer, especially as prices for solar power systems continue to decline and the U.S. continues to build its solar-generating capacity in residential and commercial spaces.

There doesn’t appear to have been a correlating increase in the number of residential fires alongside growth in residential solar installations, according to government data. The number of residential fires decreased by 5 percent over the past 10 years (2012-2021) while the installed base of residential solar systems grew.

Data gleaned from other countries may prove useful as well. In Germany, for example, a survey conducted by the U.S. Energy Department found that solar panels contributed to approximately 0.016 percent of fires in 2013. Furthermore, a comparison conducted by Verisk’s Emerging Issues team of total installations in the United Kingdom through 2023 to the number of fires attributed to solar panels in the same year showed a fire rate of roughly 0.005 percent of all units, based on UK government data.

According to available research, the list of potential causes for solar panel fires includes faulty installation, the presence of flammable vegetation, component failures, and the use of panels as architectural components.

While consumers and businesses continue to adopt and invest in GenAI, EVs, and solar panels, insurers need to understand the scope of each of these risks and the potential impact on their operations and book of business.

*This article was originally published by Insurance Journal, CM’s sister publication.