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Is AI Risk Insurance the Next Cyber for Insurers?
The rising enthusiasm around generative AI and the prospective increase in AI adoption are opening up intriguing opportunities for insurers to underwrite AI risks.
Executive Summary
Generative AI adoption brings new risks, including physical, financial and psychological harm, demanding innovative insurance solutions such as algorithmic liability coverage, write PwC's Anand Rao and Marie Carr. Here, they compare AI risk insurance with cyber insurance, noting that in spite of similarities, the rapid generative AI adoption and broader risk spectrum require more tailored and agile coverage solutions, including AI intellectual property coverage, autonomous vehicle insurance, AI ethics and compliance coverage, in addition to algorithmic liability coverage. Executive SummaryGenerative AI adoption brings new risks, including physical, financial and psychological harm, demanding innovative insurance solutions such as algorithmic liability coverage, write PwC’s Anand Rao and Marie Carr. Here, they compare AI risk insurance with cyber insurance, noting that in spite of similarities, the rapid generative AI adoption and broader risk spectrum require more tailored and agile coverage solutions, including AI intellectual property coverage, autonomous vehicle insurance, AI ethics and compliance coverage, in addition to algorithmic liability coverage.
However, before they delve into the AI risk opportunities, insurers need to address three critical questions: What aspects of the AI risks are already covered by existing insurance products (e.g., product liability, cyber risk)? What lessons can be drawn from the evolution of cyber risk insurance over the past few years that are relevant to AI risk insurance? And finally, what is the market for AI risk insurance and how can this risk be assessed and underwritten?
