Artificial intelligence (AI) is no longer a futuristic concept—it's a present-day reality shaping how businesses operate, innovate, and compete. But as AI becomes more deeply woven into the fabric of organizations, a new question is emerging: How do we manage the unique risks that come with it? And more specifically, will AI eventually need its own insurance policy, just as cyber risk did?
The Rise of AI and the Insurance Dilemma
Today, nearly 80% of businesses are using AI in some capacity. Yet, only about a third feel confident that their AI-related risks are being properly managed or transferred. This gap is reminiscent of the early days of cyber risk, when digital threats were initially bundled into broader insurance policies before evolving into a specialty line with dedicated coverage.
Industry leaders are now asking whether AI is on a similar path. As companies deploy AI in increasingly critical roles, traditional insurance policies—like general liability, cyber, or errors and omissions (E&O)—may not fully address the new types of claims and exposures that arise.
Learning from Cyber Insurance
The evolution of cyber insurance offers a valuable playbook. When cyber risks first appeared, they were often seen as just another component of existing coverage. But as incidents and claims data grew, it became clear that cyber threats required specialized underwriting, policy language, and risk mitigation strategies. The same inflection point may be approaching for AI.
Clients are already asking for clearer, affirmative language in their policies to address AI risks. Whether this leads to a dedicated AI insurance product will depend on how quickly AI adoption scales, the nature of claims that emerge, and the adaptability of current policy language. If real-world scenarios reveal gaps in coverage, the industry may be compelled to carve out AI as its own specialty product.
Assessing AI Maturity and Governance
Underwriting AI risk isn't just about identifying the presence of technology—it's about understanding how well it's governed. Insurers will need to evaluate an organization's AI maturity, including internal controls, oversight mechanisms, and ethical guardrails. This governance scrutiny helps determine both the level of exposure and whether standalone AI coverage is warranted.
For brokers working with AI-heavy firms, especially in sectors like proptech and fintech, it's crucial to consider how these risks intersect with existing technology E&O policies. A deep understanding of how AI is integrated and managed within a business is essential before deciding if separate coverage is needed.
The Role of Brokers and Insurers
Brokers play a pivotal role in this evolving landscape. As AI-related claims begin to surface—especially if they're denied under current policies due to ambiguous or missing AI language—brokers will look to insurers for leadership. Those insurers who proactively address coverage gaps, either by offering targeted AI products or updating policy language, will become go-to partners for brokers and their clients.
This is a moment ripe for product innovation. Insurers that act early to provide clear, comprehensive AI coverage will set themselves apart as leaders in the market, helping businesses navigate the uncertainties of new technology.
Actionable Takeaways
- Assess your AI risk: Businesses should regularly review how AI is used and governed within their organization.
- Engage with your broker: Ask specific questions about how your current policies address AI-related exposures.
- Seek clarity: Look for policies with clear, affirmative language regarding AI risks.
- Monitor industry trends: Stay informed about new insurance products and evolving best practices for AI risk management.
Summary of Key Points
- AI adoption is widespread, but confidence in risk management is low.
- The insurance industry may follow cyber's path, developing standalone AI policies as risks evolve.
- Strong governance and oversight are critical for assessing AI risk.
- Brokers and insurers have an opportunity to lead through innovation and clear communication.
- Businesses should proactively review and address their AI-related exposures to ensure adequate coverage.