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Imagine building your entire business around artificial intelligence, only to discover that no insurance company will cover your operations. This terrifying scenario is becoming reality as major insurers declare AI too dangerous to insure. The very companies built to manage risk are now running from what they call the ‘black box’ of artificial intelligence. Why AI Insurance Risk Has Insurers Panicking The insurance industry faces an unprecedented challenge with artificial intelligence. Unlike traditional risks, AI systems operate as complete mysteries to underwriters. One insurance executive described AI models as ‘too much of a black box’ – impossible to assess, predict, or price accurately. This fundamental uncertainty creates an insurance risk that traditional models cannot handle. The Systemic Risk That Could Bankrupt Insurers What truly terrifies insurance companies isn’t individual claims, but the potential for catastrophic systemic risk. Consider this scenario: a widely used AI model makes a critical error that affects thousands of businesses simultaneously. As one Aon executive explained, insurers can handle a $400 million loss to one company, but they cannot survive 10,000 simultaneous claims from a single AI failure. Company AI Incident Financial Impact Google False legal accusations $110 million lawsuit Air Canada Chatbot invented discounts Forced to honor fake offers Arup AI voice cloning fraud $25 million stolen Major Players in AI Liability Insurance Retreat Insurance giants including AIG insurance, Great American, and WR Berkley are actively seeking regulatory permission to exclude AI-related liabilities from corporate policies. This represents a fundamental shift in how the insurance industry views technological risk. These companies, which typically compete to cover emerging markets, are united in their assessment that AI presents unmanageable exposure. How Corporate Policies Are Evolving Against AI Threats Businesses relying on artificial intelligence now face a critical gap in their corporate policies. The exclusion of AI-related liabilities…

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Filed under: News - @ November 23, 2025 6:11 pm