Unlike traditional business insurance, AI risk isn't tied to a company's revenue. A small startup deploying a hiring tool at a single Fortune 500 company can have a much larger liability exposure than a bigger company with a low-risk internal AI. Pricing must reflect this deployment-specific risk profile.

The insurance industry acts as a powerful de facto regulator. As major insurers seek to exclude AI-related liabilities from policies, they could dramatically slow AI deployment because businesses will be unwilling to shoulder the unmitigated financial risk themselves.

Existing policies like cyber insurance don't explicitly mention AI, making coverage for AI-related harms unclear. This ambiguity means insurers carry unpriced risk, while companies lack certainty. This situation will likely force the creation of dedicated AI insurance products, much as cyber insurance emerged in the 2000s.

Organizations must urgently develop policies for AI agents, which take action on a user's behalf. This is not a future problem. Agents are already being integrated into common business tools like ChatGPT, Microsoft Copilot, and Salesforce, creating new risks that existing generative AI policies do not cover.

Insurance for AI doesn't target general models like ChatGPT. Instead, it insures customized AI systems—fine-tuned models with guardrails—deployed for a specific business purpose, such as a predictive maintenance tool or an HR application. The insured asset is the final, deployed AI-powered product, not the underlying model.

A new insurance category, separate from cyber insurance, is launching to cover enterprise risks specific to generative AI. Backed by Lloyd's of London, this product uses US lawsuit data to underwrite liabilities such as copyright infringement and personal injury caused by AI systems, addressing a critical gap for companies deploying the technology.

Existing policies like cyber insurance fail to cover AI not just because of ambiguous wording, but because their underwriting processes historically never assessed AI-specific risks. Underwriters never asked about AI systems, governance, or testing, meaning the risk was never properly assessed, priced, or intentionally covered.

Insurers like AIG are seeking to exclude liabilities from AI use, such as deepfake scams or chatbot errors, from standard corporate policies. This forces businesses to either purchase expensive, capped add-ons or assume a significant new category of uninsurable risk.

Without clear government standards for AI safety, there is no "safe harbor" from lawsuits. This makes it likely courts will apply strict liability, where a company is at fault even if not negligent. This legal uncertainty makes risk unquantifiable for insurers, forcing them to exit the market.