Insurance Companies Are Terrified to Cover AI, Which Should Probably Tell You Something

"As major corporations go, insurance companies are about the closest thing we have to rational actors. With the job of underwriting a huge range of financial risks in a volatile market economy, the buck stops with them - meaning that by and large, they're not going to insure any new product that's particularly risky or untested. In other words, insurance companies have to be practical to stay operational, even when the stock market wants to be anything but."

"That raises an interesting question: how does the insurance industry feel about AI, a highly experimental technology with almost no track record of financial success? New reporting by the Financial Times reveals some unease: top insurance firms like AIG, American Financial Group's Great American, and WR Berkley are begging US regulators to let them exclude AI liability from their policies."

"Basically, the companies are concerned about fielding multibillion-dollar claims, reflecting greater anxiety about AI's potential to cause costly and unpredictable damage to corporate revenue. WR Berkley, for example, is asking for permission not to cover claims stemming from "any actual or alleged use" of AI, including any product or service sold by a company "incorporating" the software. In AIG's case, the exclusion requests seem to be a precaution, with a spokesperson telling the FT that the company has"

Insurance companies act as practical, risk-averse underwriters responsible for large financial exposures in volatile markets. They already recognize climate change as an economic risk because hurricanes, wildfires, and droughts materially affect claims and profitability. Insurers are increasingly uneasy about AI because the technology is experimental and lacks an established track record of financial losses. Major firms including AIG, American Financial Group's Great American, and WR Berkley are requesting permission from US regulators to exclude AI-related liability from policies. Firms fear multibillion-dollar, unpredictable claims and worry that AI-driven cybercrime will strain cybersecurity insurance coverage. Some exclusion requests are described as precautionary.

Read at Futurism