Insurers up against the rising risks of generative AI

The rapid spread of artificial intelligence (AI), and generative AI in particular, has become a growing source of concern for insurance companies.

Some market players, especially in the United States, are urging regulators to introduce exclusions in insurance contracts for companies using AI tools such as chatbots.

This caution stems from insurers’ fears about the challenges posed by these technologies: malfunctions, errors, or hallucinations in AI models could potentially impact thousands of users at once.

Even with high-priced policies, insurers prefer to limit coverage for AI-related risks, as incidents involving these tools can cause large-scale damage and financial losses that are difficult to estimate.

Recent cases underscore these concerns. In February 2024, Air Canada was ordered to compensate a customer who had been misled by the airline’s chatbot when purchasing a plane ticket.