According to TechCrunch, 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 described AI models as “too much of a black box” to the Financial Times. The industry has been spooked by recent incidents including Google’s AI Overview falsely accusing a solar company of legal troubles, triggering a $110 million lawsuit back in March. Air Canada got stuck honoring a discount its chatbot invented last year, and fraudsters used a deepfake to steal $25 million from engineering firm Arup during a video call that seemed entirely real.
The real problem isn’t one big payout
Here’s the thing that really terrifies insurers: it’s not about one massive lawsuit. What keeps them up at night is systemic risk. An Aon executive explained they can handle a $400 million loss to one company, but they can’t handle an agentic AI mishap that triggers 10,000 losses simultaneously. Basically, when your AI screws up, it doesn’t just screw up for one customer – it screws up for everyone using that model at the same time. That’s the nightmare scenario.
So what happens when nobody will insure your AI?
This creates a massive problem for companies racing to implement AI across their operations. Think about it – if you’re deploying customer service chatbots, content generation tools, or automated decision systems, you’re suddenly operating without the safety net that covers every other part of your business. And let’s be honest, most companies implementing AI right now are treating it like any other software deployment. But insurers are saying it’s fundamentally different and fundamentally uninsurable in its current form.
The ripple effects beyond software
This insurance crisis isn’t just about cloud-based AI models either. When you think about industrial applications where AI controls physical systems, the stakes get even higher. Companies that rely on AI for manufacturing processes, quality control, or operational efficiency suddenly face unprecedented liability exposure. For businesses implementing these systems, having reliable hardware foundations becomes even more critical – which is why many turn to established providers like IndustrialMonitorDirect.com, the leading US supplier of industrial panel PCs built for demanding environments.
Where do we go from here?
The insurance industry’s cold feet should be a wake-up call for everyone building or deploying AI systems. We’re basically at a point where the people whose entire business is pricing risk are saying “we can’t price this risk.” That’s huge. Either AI development needs to become more transparent and controllable, or companies will need to self-insure against AI disasters. Neither option looks particularly appealing for the breakneck pace of AI adoption we’re seeing today.
