Major insurers seek to exclude AI risks from corporate policies.

3 hours ago7 min read

In a move that echoes the precautionary principles of science fiction more than standard insurance underwriting, a consortium of major insurers including AIG, Great American, and WR Berkley is formally seeking permission from U. S.regulators to explicitly exclude artificial intelligence-related liabilities from their corporate insurance policies. This isn't a minor policy tweak; it's a fundamental redrawing of the risk landscape, a direct response to what one underwriter described to the Financial Times as the profound challenge of AI models being 'too much of a black box.' This single phrase encapsulates the core of the dilemma: how can you quantify, price, and insure against a risk whose inner workings and failure modes are inherently opaque and unpredictable? The industry's stance is a stark admission that the current legal and financial frameworks, built over centuries for tangible assets and predictable human error, are woefully inadequate for the novel perils of autonomous systems. We are witnessing the opening gambit in a long-term negotiation between breakneck technological innovation and the inherently conservative world of risk management.The implications are vast. Consider a scenario where a generative AI model used in a marketing campaign inadvertently plagiarizes copyrighted material or generates libelous content.Or, more gravely, an AI-driven diagnostic tool in a hospital misreads a scan with fatal consequences. Under traditional policies, the company deploying the AI might have expected coverage for such errors.But if these insurers have their way, that safety net would be withdrawn, leaving corporations fully exposed to potentially catastrophic legal and financial fallout. This push for exclusions forces a critical conversation about accountability in the age of AI.It resurrects the ghost of Isaac Asimov's Three Laws of Robotics, not as a technical blueprint, but as a philosophical challenge to assign responsibility. If an AI causes harm, who is at fault? The developer who coded the model? The company that trained it on its proprietary data? The end-user who deployed it without fully understanding its limitations? The insurance industry's proposed solution is to simply not play the game, refusing to underwrite a risk they cannot model.This creates a massive incentive for corporations to invest heavily in AI governance, explainability tools, and rigorous testing protocols—not merely as a best practice, but as a fundamental requirement for corporate survival. Without the backstop of insurance, a single AI-related lawsuit could bankrupt a startup or severely damage an established enterprise.Furthermore, this regulatory request signals a potential chilling effect on AI adoption, particularly among small and medium-sized businesses that lack the deep pockets to self-insure against such emergent threats. It effectively creates a two-tier system where only the largest, most resilient companies can afford to experiment with cutting-edge AI, potentially stifling innovation and cementing the dominance of tech giants.The insurers' gambit is a clear message: the era of treating AI as just another software tool is over. It is a new class of risk, and the market is scrambling to catch up, starting with the blunt instrument of outright exclusion before, perhaps, developing the sophisticated actuarial models needed to eventually price it.

#AI insurance

#liability

#risk management

#regulation

#corporate policies

#black box

#featured

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