How AI-driven synthetic media is forcing Indian OTT to rethink Insurance as risks rise

By Sumant Salian, Divisional Director (Business Head) -Media and Entertainment, Alliance Insurance Brokers

Artificial intelligence has made its way into India’s booming OTT ecosystem, enabling activities ranging from the generation of storylines and visual effects to dubbing, trailers, and recommendation systems. However, as the media and entertainment industry increasingly relies on AI technology, it becomes vulnerable to legal and financial risks associated with synthetic media- content generated and edited by AI, making it look realistic.

The implementation of Generative AI has rapidly shifted from being used in experimental purposes to becoming a part of everyday use in Indian media and entertainment. Today, in many cases, around 92% content development is done by primary uses of AI technology. In the OTT space, the revenue from video subscriptions in India has increased by 11% to around INR 92 billion. AI is currently being used to script, create story boards, make virtual sets, develop voiceovers, and design digital avatars, which can be used in multiple languages.

Synthetic media and the claims it can trigger
A number of different avenues have opened up for potential financial claims due to synthetic media. The creation of deepfakes and AI portraits can lead to confusion between parody, slander and the misuse of a person’s image. It can lead to potential litigation against OTT services and creators of such content based on issues such as defamation, emotional harm, and consent breaches in case of realistic portrayals of actual people. There is also the risk of creating material which infringes on intellectual property rights and exposes private data through use of big data models.

Fake or tampered media,doctored production stills, fake delivery proofs, fake invoices are also becoming a part of insurance claim channels, helping to make exaggerated or completely fabricated insurance claims and further increasing losses for the owners of media and insurance companies.

Deepfakes are estimated to contribute to about 11% of global fraud today, with the help of generative AI which helps in creating fake invoices, repair invoices, and identity documents passing the first-line checks. In India, new amendments to the IT rules have identified “Synthetically Generated Information” as any form of multimedia information that has been created or tampered with such that it looks like the real thing.

How insurance responds to synthetic media risk
There has been a growing effort on the part of insurance firms to offer media liability coverage, cyber insurance, and Tech E&O coverage to mitigate the risks associated with synthetic media. Digital media liability under the umbrella of cyber insurance covers claims made by third parties related to content on the internet. These may include claims regarding defamation, intellectual property infringement, privacy and misrepresentation and commentators indicate that this may be relevant to AI-produced synthetic media that duplicates the copyrighted work.

Insurance schemes suggested for high-risk AI applications in India involve the minimum requirements for insurance coverage that includes professional liability due to inaccurate or improper use of the outputs of AI applications, commercial liability for injury or damage to third parties and cyber insurance for data breaches. However, at the same time, insurers have begun to raise their underwriting criteria and have demanded forensic proof of the authenticity of the contested content as well as financial loss before providing coverage.

Growing importance of insurance with synthetic media
Synthetic media liability has emerged as an important segment in the insurance space of India’s OTT and digital content industries. Although there is little development within the country in terms of media liability insurance for OTT and digital content makers, the quick integration of artificial intelligence within the content-making process is forcing producers, platforms and rights owners to look for better protection from AI-enabled liabilities, especially defamation, intellectual property and privacy.

Simultaneously, the insurers themselves are evaluating the risk of being affected by deepfakes and synthetic media-related claims and looking into novel liability insurance products. At this point, AI not only represents a technology that facilitates the creation of the content, but also a source of financial claims associated with liability, cybercrime, professional indemnity and fraud risks. As synthetic media continues to become more advanced and widespread, its management by Indian entertainment companies through AI insurance becomes increasingly significant.