What happens when the software everyone is racing to adopt becomes too risky for anyone to insure? According to reporting from the Financial Times, we are about to find out.
Major insurers including AIG, Great American, and WR Berkley are asking United States regulators for permission to exclude AI-related liabilities from corporate policies. One underwriter described the AI models’ outputs as too much of a black box.
The industry has good reason to be concerned. Google’s AI Overview falsely accused a solar company of legal troubles, triggering a one hundred and ten million dollar lawsuit back in March. Air Canada last year got stuck honoring a discount its chatbot invented. In another case, fraudsters used a digitally cloned version of a senior executive to steal twenty-five million dollars from the London-based design engineering firm Arup during a video call that seemed entirely real.
What truly terrifies insurers is not one massive payout; it is the systemic risk of thousands of simultaneous claims when a widely used AI model fails. As one Aon executive explained, insurers can handle a four hundred million dollar loss to one company. What they cannot handle is an AI mishap that triggers ten thousand losses at once.