Insurers balk at paying out huge settlements for claims against AI firms

OpenAI and Anthropic are considering using investor funds to settle potential claims from multibillion-dollar lawsuits, as insurers balk at providing comprehensive coverage for the risks associated with artificial intelligence.

The two US-based AI start-ups have traditional business insurance coverage in place, but insurance professionals said AI model providers will struggle to secure protection for the full scale of damages they may need to pay out in the future.

OpenAI, which has tapped the world’s second-largest insurance broker Aon for help, has secured cover of up to $300 million for emerging AI risks, according to people familiar with the company’s policy.

Another person familiar with the policy disputed that figure, saying it was much lower. But all agreed the amount fell far short of the coverage to insure against potential losses from a series of multibillion-dollar legal claims.

Aon declined to comment on individual companies. But Kevin Kalinich, head of cyber risk at Aon, said of the insurance sector broadly, “we don’t yet have enough capacity for [model] providers.”

He added of insurers, “what they can’t afford to pay is if an AI provider makes a mistake that ends up as... a systemic, correlated, aggregated risk.”

The industry’s reticence to provide comprehensive cover for AI companies comes from the unprecedented scale of potential claims faced by relatively young tech companies. The risk is heightened as enormous damages known as “nuclear verdicts” against big US companies have also become more common.