How AI Is Reshaping E&O Risks for Law, Technology and Real Estate Firms

• By: Olivia Overman
• October 19, 2026

The 2026 professional liability market is characterized by favorable pricing and abundant capacity, according to the May 2026 “U.S. Professional & Executive Liability Insurance Market Report”.

However, agents face an increasingly complex professional liability environment as client expectations, regulatory requirements, emerging technologies and evolving litigation trends create new sources of risk.

“The rapid development of artificial intelligence (AI) solutions has changed the landscape, but the full effect of AI is not yet known,” says Aaron Belair, president of technology and life sciences at Intact Insurance Specialty Solutions.

“Organizations are approaching AI in a variety of ways—developing their own proprietary AI solutions, licensing AI tools for internal or customer-facing use, or relying on AI-enabled products and services from third-party vendors,” Belair says. “Each of these approaches presents its own risk considerations, and the long-term implications are still evolving.”

As AI adoption accelerates across industries, insurers are increasingly challenged to keep pace and adapt to the evolving risks their clients face. Some of the most impacted industries include technology, real estate and the legal sector.

“As more industry sectors are adopting AI models and usage, we are seeing the need for underwriting and coverage to adapt in broad industry sectors,” says Dan Law, head of the cyber practice, custom risk solutions at HSB. “Discussions in prior years often surrounded technology, such as software as a service (SaaS), but they have now evolved into many other areas as well.”

Companies in the technology sector are “among the most affected by evolving E&O exposures, driven largely by the rapid adoption and integration of AI,” Belair says. “Technology companies are developing, deploying and incorporating AI capabilities into products and services at a remarkable pace, often relying on increasingly complex models and third-party providers.”

Real estate is another sector facing significant E&O pressure “due to the industry’s increasing complexity and regulatory scrutiny,” says Kelly Basler, senior vice president and underwriting manager, Munich Re Specialty—North America.

“Property managers, brokers, leasing agents, consultants, appraisers, asset managers, developers, auctioneers, business brokers and mortgage professionals are all facing expanding professional liability exposures,” Basler says.

Some of the key drivers behind these pressures in the real estate sector include greater regulatory oversight and enforcement activity, increasing disclosure requirements, reliance on third-party vendors and affiliated entities, and more complex business models spanning multiple services, according to Basler.

“In addition, real estate disputes are frequently resolved through mediation and arbitration rather than traditional litigation, creating defense costs and liability concerns that are not always adequately addressed by generic E&O policies,” Basler says.

Within the legal sector, insurers continue to monitor evolving E&O exposures, including litigation financing, legal system abuse, cybersecurity threats and the use of AI in legal research.

“Within lawyers E&O, wills, trusts and estates is an area to watch,” says  Michael Callis, senior director, lawyers professional product line, Markel. “As baby boomers pass wealth to the next generation, the largest generational wealth transfer in U.S. history is increasing the complexity of estate planning and administration, contributing to more disputes and suits brought by disgruntled beneficiaries.”

Further, rising social inflation continues to drive larger and more costly claims. “Legal system abuse affects nearly every E&O segment where an error can result in a significant plaintiff award,” says Beth Whitney, head of professional liability U.S. at Swiss Re Corporate Solutions. “This is driven by plaintiff attorney strategies designed to heighten juror emotion and increase award amounts.”

“As nuclear verdicts become more common, carriers and policyholders may be more reluctant to take claims to trial, which can push settlement values higher, which in turn can increase loss ratios and insurance rates,” Whitney explains.

For agents looking to deliver exceptional service, discussing how previous claims may affect coverage or premiums can provide valuable insight for their clients.

“Claims history remains one of the most important variables,” Whitney says. “A favorable loss history can support better pricing, while paid losses, open claims or a pattern of frequent claims can result in higher premiums, higher retentions or more restrictive terms.”

Olivia Overman is IA content editor.

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