Why the man in the loop costs extra: David Richards MBE
I do not rely on commentators to predict the future; I look where the money is. Opinions are cheap. Being prepared to lose money if you are wrong is different. The last American presidential election was a good example.
The last American presidential election was a good example. In the autumn of 2024, news coverage was reporting a dead heat. National polls showed a slight lead for Harris, and many of the modellers were refraining from making calls. Prediction markets were more assertive. Around mid-October, Polymarket had Trump’s likelihood of winning above sixty per cent for the first time since July, and held the price there while the news outlets carried on describing a coin flip. The move was driven by a French trader known only as Théo. Théo believed the polls were missing voters for Trump who were not willing to publicly support him, and, instead of making a case, he paid YouGov to conduct private surveys for him in Michigan, Pennsylvania and Wisconsin. Rather than ask people how they would vote, he asked them how they thought their neighbours would. What came back convinced him. He increased his bet on the election to almost $80 million, most of his liquid wealth, and he made around $85 million. Insurers do this, minus the drama, and do it every day for every single risk that you can imagine. An underwriter’s price, in fact, is the most honest opinion poll that exists, as getting it wrong costs the firm money, not credibility. This is why one event that happened to one of the companies at Yorkshire AI Labs has stuck with me.
LexCelerate is an AI law firm. After applying for professional indemnity cover and receiving an initial quote, they were asked to send their principals to London so the underwriters could review and evaluate the system and how it worked. Then came the questions, and all were focused on people. Can this be overridden by a human? Does a human determine that? Does a human type in the bank account number? Our assumption was that they wanted reassurance that a human remained in charge. In fact, they were looking to confirm the opposite. Every place where a
human could intervene represented another place where something could go wrong. The updated quote came in fifty per cent lower. I have been thinking about that number for a couple of weeks, because the entire public discussion regarding artificial intelligence has been centred on a phrase that nobody has bothered to test: the human in the loop.
The people who pay out claims have come to a different conclusion. They are not saying machines are better than lawyers, just that a deterministic process is easier to test, log and bound than a tired worker. A conveyancer can easily transpose two digits at the end of a working week. Discretion is where the money escapes, and discretion is precisely what a person brings.
Once reasoning like this is assigned a cost, it becomes self-perpetuating. A firm that makes a partner review each and every file will simply be the expensive one. The same holds for diagnosis, for audit, for any professional service where somebody signs to say they looked. That signature becomes a cost-benefit problem. None of this means people should be lifted out of serious work. It means nobody had checked which of their interventions reduce risk, and the underwriters have started checking. Insurance is where the future shows up first, because it is the only trade that pays for guessing wrong. What was settled in that room in London was an assumption none of us had thought to examine: that serious work needs a person inside every process. The answer was that the person is what makes it expensive. One quote, one small firm, one afternoon in London. We are drafting rules that will require human oversight just as the market has started charging extra for it.
David Richards is a technology entrepreneur and philanthropist