By Henry Gale
Oct 27 - (The Insurer) - As companies across industries race to embrace artificial intelligence, their use of the technology may change their exposure to various risks. As this analysis by The Insurer highlights, some liability carriers have already begun to respond with exclusions.
Verisk’s Core Lines Services, which provides standardised policy language for insurers, announced in July that it had made a multistate filing to help insurers address emerging risks, with a new optional generative AI exclusion top of the list.
Joseph Lam, vice president of general liability, core lines at Verisk, told The Insurer that the move came after it received “strong interest from many of our customers to create underwriting tools to address this emerging risk”.
The Insurer’s analysis of product filings to state regulators in the U.S. shows other insurers including WR Berkley, Cincinnati Financial, Frederick Mutual and Philadelphia Insurance have separately looked to introduce wording that would restrict coverage for AI-related losses in recent months.
Meanwhile, at least half a dozen insurers have already filed to adopt Verisk’s new wordings. Since the exclusions are optional and Verisk’s filing also contains endorsements related to other emerging risks, this does not mean those insurers will necessarily use the GenAI exclusions.
Carriers considering excluding certain AI risks must also beware of possible implications for their trading relationships. Sources told The Insurer earlier this year that pushback from brokers led one U.S. carrier to withdraw AI exclusions they had attempted to introduce.
Definitions of AI and GenAI differ, and with the technology being used in various (often small) ways across all parts of businesses – including by employees in ways bosses may be unaware of – clients and brokers might fear new broad exclusions could become an excuse to deny almost any claim.
Playing it safe by limiting AI exposures may end up being a very risky decision commercially.
To exclude or not to exclude will ultimately come down to whether the industry decides AI is just another emerging litigation trend it can price for, or a distinct risk better underwritten in a class of its own.
Over the coming days, The Insurer is going to look in depth at the industry’s early AI exclusions. On Tuesday, we’ll cover policy definitions of AI and GenAI, and why there is a big difference between the two. Later in the week, we’ll look at the text of the exclusions themselves and the response from companies looking to insure AI as a standalone risk.
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