Full Breakdown
Major Insurers Seek Exclusion of AI Liability from Corporate Policies
11/24/2025, 6:03:21 AM
Insurers' Request to Regulators
Three major insurance companies—AIG, Great American, and WR Berkley—are petitioning U.S. regulators to allow them to exclude artificial intelligence (AI) liabilities from corporate insurance policies. This request reflects a significant lack of confidence in the insurability of AI technologies, which are increasingly being adopted by businesses. The insurers argue that the unpredictable nature of AI, often described as a "black box," makes it difficult to assess risks accurately. An underwriter noted that the outputs of AI models are too uncertain to price effectively, prompting the industry's retreat from covering AI-related risks.
Context of AI Adoption and Risks
As businesses rapidly adopt AI tools, including chatbots and generative AI, they have encountered costly errors attributed to AI "hallucinations." For instance, AIG has expressed concerns that generative AI represents a "wide-ranging technology" with potential for future claims to increase over time. WR Berkley aims to block claims involving any actual or alleged use of AI, indicating a broader trend among insurers to distance themselves from the liabilities associated with these technologies.
Systemic Risks Highlighted
The insurance industry's hesitation is not solely based on individual incidents but also on the potential for systemic risks. A single malfunction in a widely-used AI model could result in simultaneous claims from numerous businesses, a scenario that traditional risk models are ill-equipped to handle. An executive from Aon emphasized that while they could manage significant losses from one company, they could not absorb the fallout from an AI incident that triggers thousands of claims at once. This concern is underscored by recent high-profile incidents, such as a digitally cloned executive being used to steal $25 million from a London engineering firm.
Accountability Challenges
The question of accountability in AI-related incidents remains contentious. Experts highlight the ambiguity surrounding liability when AI systems are involved. Rajiv Dattani, co-founder of the Artificial Intelligence Underwriting Company, pointed out that it is unclear who is responsible when AI outputs lead to errors. In many cases, businesses using AI tools have faced backlash for issues arising from these technologies. For example, Virgin Money had to apologize after its chatbot reprimanded a customer, and Air Canada faced legal action due to a fabricated discount generated by its chatbot.
Official Statements & Responses
AIG has indicated that while it has filed for generative AI exclusions, it currently has no plans to implement them. The company’s filing with Illinois regulators reflects a cautious approach to AI risks, acknowledging the increasing likelihood of claims as AI technologies evolve. Dennis Bertram, head of cyber insurance for Europe at Mosaic, reiterated that the uncertainty surrounding AI outputs makes them difficult to insure.
Verbatim Quotes
- “What we can't handle is an agentic AI mishap that triggers 10,000 losses at once.” — Aon Executive
- “Nobody knows who’s liable if things go wrong,” — Rajiv Dattani, Co-founder of the Artificial Intelligence Underwriting Company
- “If you remove a human from a process or if the human places its responsibility on the AI, who is going to be accountable or liable for the mistakes?” — Kelwin Fernandes, CEO of NILG.AI
Conclusion
The request by major insurers to exclude AI-related liabilities from corporate policies signals a critical moment in the intersection of technology and risk management. As businesses continue to integrate AI into their operations, the insurance industry faces profound challenges in addressing the associated risks and determining accountability.
