Here’s an intriguing use-case for parametric triggers within insurance for a personal lines protection policy that even a year ago you may not have thought was needed.Y Combinator backed Singularity has launched a parametric cover that protects your income in case your job is lost to artificial intelligence (AI).SingularityShield Income Cover is, “the first income‑protection policy specifically designed for workers whose roles are eliminated by AI‑driven automation,” the company explains.“With AI adoption accelerating across every sector, workers face unprecedented displacement risk.

SingularityShield provides the first data‑driven safety net built specifically for the age of artificial intelligence.” A recent found that some 92 million jobs may be lost by 2030 due to technology-driven disruption, chiefly from AI automation.McKinsey has said that generative AI can already automate 60-70 % of the tasks employees perform today, while a PwC study found one in four CEOs expects generative AI to trigger workforce reductions of 5 % or more this year.In addition, some 52% of US workers are said to fear the impact of artificial intelligence (AI) on their future, and in the UK an ACAS commissioned study found over a quarter (26%) of workers are worried that artificial intelligence (AI) will lead to job losses.

It’s a topic that’s front of mind right now, given the rapidly accelerating advancements in AI.Singularity aims to provide an insurance product to help in the event a workers job is lost due to AI technology and the insurance utilises parametric triggers for rapid and transparent payouts.Singularity said that its AI job loss insurance policies will feature a dual-trigger mechanism based on parameters derived from its proprietary AI-Displacement Risk Index (AIDR) and evidence of involuntary lay off from occupation.

The parametric trigger requires the AI-Displacement Risk Index (AIDR) to surpass  an agreed threshold, as well as the employee to lose their job on evidence of a separation notice being filed.As a result, unlike traditional income protection products, the parametric SingularityShield Income Cover needs no lengthy claims assessment and policyholders can get instant confirmation and receive benefits on their usual payday.The parametric policy, once triggered, will pay out up to 50 % of net pay on every scheduled payday once coverage is triggered, for pre-agreed terms of 3, 6 or 12 months of cover.

Singularity constructs its proprietary AI-Displacement Risk Index (AIDR) using a range of data sources to measure the impact of AI on various occupations and updates it regularly, making weightings and update information available on its website for transparency.It uses data sources from corporate filings, earnings releases and call transcripts, as well as official government data sources and market signals.The company said, “This dual-trigger mechanism, informed by Corporate, Official, and Market data, ensures payouts are directly linked to AI’s impact on job roles and an individual’s employment status, with no traditional adjusters or paper claims required.” The parametric AI job loss insurance is first being made available to knowledge workers in the UK and US, with a plan to roll it out to additional countries and sectors in future.

The company says it will partner with trusted insurers and reinsurers, such as Lloyd’s capacity or US admitted carriers.Given the rise of AI, this is an insurance product that even a year ago may not have been deemed a business opportunity, but Singularity has embraced technology and insurance techniques to deliver a parametric use-case to meet what many see as a growing need.It’s another great example of the application of parametric triggers within personal insurance lines and it seems applicable to other income protections and similar scenarios, where data may be available to construct reliable indices to use as trigger inputs.

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