"Major insurers including AIG, Great American, and WR Berkley are asking U.S. regulators for permission to exclude AI-related liabilities from corporate policies. One underwriter describes the AI models' outputs to the FT as "too much of a black box." The industry has good reason to be spooked, the story reminds us. Google's AI Overview falsely accused a solar company of legal troubles, triggering a $110 million lawsuit back in March. Air Canada last year got stuck honoring a discount its chatbot invented."
"What really terrifies insurers isn't one massive payout; it's the systemic risk of thousands of simultaneous claims when a widely used AI model steps in it. As one Aon executive put it, insurers can handle a $400 million loss to one company. What they can't handle is an agentic AI mishap that triggers 10,000 losses at once."
Major insurers including AIG, Great American, and WR Berkley are asking U.S. regulators for permission to exclude AI-related liabilities from corporate policies. Underwriters say AI model outputs are opaque and unpredictable. Several high-profile incidents demonstrate real liability risks: Google's AI Overview falsely accused a solar company, triggering a $110 million lawsuit; Air Canada honored a chatbot-invented discount; fraudsters used a digitally cloned executive to steal $25 million from Arup. Insurers fear systemic risk from thousands of simultaneous claims if a widely used model fails. Firms can absorb large single losses but cannot handle mass, correlated AI-triggered claims.
Read at TechCrunch
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