(Insurance Company) – The first companies to launch standalone insurance products for the risk of artificial intelligence are beginning to expand their product offerings as the early markets develop.
It is not yet clear whether the increased risk of AI liability will be addressed by existing product categories or by an entirely new class of insurance. Even if AI can follow in the cyber footsteps and take on other classes individually, it can take time for the market to form a standardized product.
This pattern has been seen in carbon credit insurance in recent years as insurance companies and brokers test products that cover different stages of the carbon credit life cycle of different organizations in the carbon market.
According to George Beatty's Head of Innovation, carbon credit insurance is beginning to move beyond the “fast prototyping” phase, approaching “the fit point of the product market.”
Currently, AI insurance is in the fast prototyping phase.
Munich RE became one of the first (re)insurers to offer AI-specific coverage when it submitted its performance guarantee for its anti-fraud AI model in 2018. We quickly expanded this principle to ensure the performance of other types of commercial AI models.
By 2023, reinsurers were offering low-performance insurance to companies implementing AI models developed in-house.
In the same year, Armilla AI, which subsequently focused on AI risk management and performance assessment, participated in the 10th cohort of Lloyd's lab accelerator program.
Later in 2023 we launched an AI product provider insurance-backed performance guarantee.
By 2025, both Munich RE and Almira will provide AI insurance for the use of corporate AI models, covering a variety of financial and liability risks associated with technology deployment.
Testudo, the latest AI insurance startup to graduate from Lloyd's lab, is set to begin coverage for companies deploying AI.
Its co-founder and CEO George Lewin Smith told insurers that their focus on its client segments is that these companies struggle most with the risks of deploying AI, and that it helps them control the accumulation of risk as underwriters compared to A-model or vendor insurance.
In a recent interview with insurance company TV, Armilla co-founder and CEO Karthik Ramakrishnan said the insurance market is currently in the “investigation phase” that determines how to handle exposure to AI.
Once AI insurance is itself a product category, it takes time to establish the scope of AI-related risks to cover.
Pierson Ferdinand's lawyer Howard Panensky can take time as the current soft cyber market serves as a brake on the ability of insurers to rule out risk and move into a new coverage category.
The insurer's discussion with Lewin-Smith of Testudo, Ramakrishnan of Armilla and Panensky of Pierson Ferdinand is part of a series of articles this week focusing on new AI risks.
