AI is too risky to insure, say people whose job is insuring risk

What happens when the software that everyone’s racing to adopt becomes too risky for anyone to insure? According to reporting from the Financial Times, we’re about to find out.

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. And fraudsters last year used a digitally cloned version of a senior executive to steal $25 million from the London-based design engineering firm Arup during a video call that seemed entirely real.

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.