Picture this: you open your insurance renewal notice, and the premium has jumped by 15%. Your broker mentions something about “emerging technology risks” and “AI liability concerns.” You’ve just started using an AI tool to help with appointment scheduling and treatment planning, thinking it would make life easier. Now you’re wondering if that decision will cost you more than just the software subscription.
If this scenario sounds familiar, you’re not alone. I recently moderated a panel on AI in dental practices, and when I posed this question to the panellists, experienced practice owners and technology entrepreneurs, it had them stumped. The silence was telling. Here we are, adopting powerful new tools without fully understanding how they’ll affect one of our biggest expenses: insurance.
Dental practice owners across Australia are facing a perfect storm of rising insurance costs and rapid technology adoption. The question on everyone’s mind is simple: Will adopting AI in your practice raise or lower your premiums?
The Premium Problem Nobody Saw Coming
Insurance costs for dental practices have been climbing steadily. Risk Strategies’ 2025 outlook for the United States dental sector shows that property, cyber-liability, and professional-indemnity premiums have all increased, with some malpractice premiums rising by double digits due to higher claim payouts and a surge in complaints to state boards. Cyber-liability claims have climbed as more practices store patient records electronically.
Australia, the Insurance Council and CSIRO report that general insurance premiums have recorded two consecutive years of double-digit growth, placing financial strain on customers. For practice owners already dealing with cost pressures from supplies, labour and equipment, another expense eating into margins is the last thing anyone needs.
The arrival of AI tools in dentistry adds a new dimension to this challenge. Insurers are watching closely as practices adopt everything from diagnostic algorithms to administrative automation. They’re asking themselves the same question you probably are: Does AI make a practice safer or riskier?
What AI Can Do for Your Practice
Australian dentists and practice owners are increasingly adopting AI to support both diagnosis and practice workflows. Tools such as Pearl’s Second Opinion, CoTreat AI, and Eyes of AI assist with radiograph analysis, treatment planning, and cephalometric tracing in seconds, helping clinicians detect disease earlier and communicate findings more clearly. Systems like Heidi, Kiroku, and DentalFlo AI extend automation to note-taking and patient interaction, improving consistency while demanding stronger oversight on data use and professional responsibility.
The potential benefits are compelling. Imagine an AI system that spots early signs of periodontal disease in X-rays that might otherwise go unnoticed during a busy day. Or software that predicts which patients are most likely to miss appointments, letting your team reach out proactively. Administrative tasks such as patient follow-ups, appointment scheduling, and treatment plan documentation can be automated, freeing up your team to focus on patient care.
Yet every silver lining has its cloud. These tools rely on sensitive health data, and the California Dental Association warns that AI systems require vast amounts of patient information, raising privacy and security issues. When an algorithm misinterprets an X-ray or a generative AI tool incorporates biased training data, the result could be a misdiagnosis or inappropriate treatment.
The national review of safe and responsible AI in Australian health care notes that professional responsibility and liability for AI use is a significant concern for health professionals and insurers. This means you need to consider not just the clinical benefits of AI but also how insurers will view these tools when they assess your risk profile.
How Insurers Are Sizing Up AI in Healthcare
Insurers make their living by assessing risk based on both the likelihood and the severity of potential losses. When practitioners adopt AI, underwriters ask whether the technology reduces or introduces new exposures. The answer, as it turns out, is both.
On the positive side, AI-driven tools can improve documentation accuracy and reduce workflow errors. For example, ambient AI scribes in Australian health settings are reported to lessen time spent on notes and support more timely clinical summaries. Another study of voice-recognition tools in general practice found AI transcription reduced clinician after-hours admin time, improving efficiency and record quality. By reducing documentation burden and enhancing record integrity, dental practices may present a stronger operational risk profile to insurers.
The flip side tells a different story. AI systems can create novel liabilities that insurers haven’t priced for yet. The California Dental Association notes that reliance on AI without proper clinician oversight may result in misdiagnoses or algorithmic bias. The Department of Health’s review emphasises that questions of professional responsibility and liability around AI use are a concern for insurers.
Underwriters are likely to scrutinise how practice owners train their teams, validate AI tools and protect patient data. Where AI recommendations influence clinical decisions, insurers may anticipate a higher risk of malpractice claims until legal frameworks and professional standards catch up with the technology.
Learning from Other Industries
The dental sector isn’t the first to grapple with AI and insurance. Other industries offer valuable lessons about how this relationship develops.
In manufacturing, the growing use of humanoid robots has led to increased insurance payouts. A 2024 analysis by 3Laws Robotics reports that the global stock of robots is projected to exceed 23 million units in 2024 and that insurance payouts for robotics-related incidents could rise by up to 35% over the next five years. This reflects the greater value of equipment and the potential for malfunctions or cybersecurity failures.
Legal scholars have noted that businesses manufacturing and using AI will, in the long run, have little choice but to purchase liability insurance because they are likely to face lawsuits. Insurers will encourage these businesses to adjust their behaviour and adopt safety improvements to qualify for coverage.
In healthcare, autonomous surgical robots and diagnostic algorithms raise similar questions about who is responsible when something goes wrong. In the automotive sector, liability for autonomous-vehicle accidents has shifted toward manufacturers and software developers, prompting new forms of mandatory insurance.
These cross-industry experiences illustrate a pattern: AI adoption can both lower and raise premiums depending on how risks are managed and allocated. The same principle applies to dental practices.
What This Means for Your Practice
For Australian practice owners, premiums will depend on the balance between efficiency gains and liability concerns. AI-enabled clinical documentation may reduce the frequency of inadequate recordkeeping and support lower premiums. Conversely, misdiagnoses or data breaches attributable to AI could trigger malpractice or cyber-liability claims, pushing premiums higher.
The trend toward AI-specific exclusions in insurance contracts signals that insurers are cautious about untested applications. Verisk and Berkeley have rolled out generative AI exclusions and absolute AI exclusions in some policies. At the same time, new AI-liability policies, such as the one offered by Armilla Insurance Services for risks like AI hallucinations and mechanical failures, demonstrate that insurers are willing to provide coverage when risks are clearly defined.
In Australia, regulation of AI in health care is gaining prominence. AHPRA’s 2024 guidance emphasises that practitioners remain accountable for any AI they use, must understand how it operates and obtain informed consent from patients for AI-enabled tools. Practice owners who document robust AI governance, oversight and alignment with TGA and privacy rules will present a stronger regulatory-compliance profile. Without such governance, insurers may view AI use as a higher risk.
A Practical Roadmap for AI Adoption
If you’re considering AI for your practice or already using it, these steps will help you manage the insurance implications.
1. Know Why You’re Using AI
Start by identifying which clinical or administrative problems the technology solves. Is there evidence of accuracy and safety? What data does the system need, and can you justify collecting it? Obtain informed consent from patients for data use and be transparent about how AI supports their care.
2. Build Strong Governance and Training
Maintain confidentiality through encryption, multi-factor authentication and regular audits. Provide continual training so clinicians and practice teams understand AI limitations and retain ultimate decision-making authority. Document your protocols for validating AI recommendations before they influence treatment decisions.
3. Talk to Your Broker Early
Don’t wait until renewal time to mention AI adoption. Explain how AI is used in your practice, including validation procedures and human oversight. This transparency helps underwriters differentiate between responsible adoption and high-risk experimentation. Your broker can guide you on whether your current policy covers AI-related incidents or if you need additional coverage.
4. Stay Informed About Policy Changes
Watch for AI-specific exclusions and new products entering the market. Combining standard coverage with tailored AI endorsements may provide comprehensive protection. Read renewal documents carefully and ask questions about any new exclusions or limitations.
A Brighter Horizon
It’s not all doom and gloom. History suggests that insurance premiums for new technologies often follow a predictable pattern: initial caution and higher costs, followed by decreasing premiums as the technology matures, risks become better understood, and regulatory frameworks stabilise.
The automotive insurance industry provides one of the clearest examples. When telematics and usage-based insurance emerged, insurers initially priced these programmes conservatively. Yet within a few years, the technology matured, and premiums began to fall. According to research on telematics adoption in Italy, where 16% of auto insurance contracts now feature telematics devices, policyholders can save up to 30% on their renewal premiums based on safe driving behaviour. Progressive and Nationwide in the United States report similar discount ranges of 30-40% for drivers who demonstrate safe habits through their telematics programmes.
The pattern repeats in cybersecurity insurance. When cyber insurance first emerged, premiums doubled in 2021 and 2022 as insurers grappled with unknown risks. Yet by 2023, as the market matured and organisations adopted security frameworks, prices began declining. Swiss Re reports that after double-digit rate increases through 2022, the cyber insurance market entered a phase of rate reductions as competition increased, and insurers gained a better understanding of the risks.
More tellingly, organisations that demonstrated cybersecurity maturity saw measurably lower premium increases. The 2024 Healthcare Cybersecurity Benchmarking Study found that organisations using the NIST Cybersecurity Framework as their primary security framework experienced only a 6% increase in cyber insurance premiums, compared to 18% for organisations without such a framework.
McKinsey’s research on IoT technologies in insurance suggests that even when high-risk customers can be distinguished from low-risk ones using additional data, overall premiums may fall due to discounts for responsible technology use. Their analysis notes that more effectively combating fraud, increasing the use of allied repair workshops, and offering assistance and service add-ons are initiatives that could more than compensate for declining premiums.
For AI in healthcare specifically, the trajectory appears similar to cyber insurance two decades ago. The Geneva Association reports that AI insurance products are currently in pilot phases, starting with careful limitations and higher premiums while gathering loss data, a pattern similar to that of cyber insurance, which followed a period of premium stabilisation and eventually decreased for well-governed adopters.
What does this mean for dental practices? If you adopt AI responsibly now and can demonstrate strong governance, you’re positioning yourself to benefit when insurers eventually price these technologies more favourably. The practices that will see the lowest premiums over the next five years will be those that start building their governance frameworks today. Just as safe drivers now pay 30% less through telematics programmes, dental practices with mature AI governance may eventually see similar premium advantages over those that waited or adopted carelessly.
The Road Ahead
AI adoption in dentistry and medicine is gathering pace, and insurers are still learning how to price the associated risks. For Australian practice owners, the opportunity lies in using AI to improve care and efficiency while demonstrating responsible stewardship.
Experiences from robotics, autonomous vehicles and other sectors show that insurance premiums can rise or fall depending on how proactively organisations manage new risks. With clear governance, transparency and adherence to emerging regulatory standards, AI can become a tool that improves patient outcomes and, over time, moderates insurance costs. Without these safeguards, insurers may view AI as an unquantified liability and price policies accordingly.
The choice, as always, is yours. Will you adopt AI thoughtfully and position your practice as a lower risk? Or will you rush in without governance and face the consequences at renewal time? The practices that thrive in this new era will be those that treat AI as both a clinical opportunity and a risk-management challenge requiring careful attention.
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About the Author
Sean Perera
Chief Technology Officer
