Major insurers move to avoid liability for AI lawsuits as multi-billion dollar risks emerge — Recent public incidents have lead to costly repercussions

Major insurers like AIG, WR Berkley, and Great American are seeking regulatory approval for new policy exclusions to protect themselves from costly AI failures. Recent incidents, such as Google's defamation suit and Air Canada's chatbot error, have highlighted the unpredictability and potential risks associated with AI systems. Insurers are struggling to define liability boundaries, with some implementing exclusions for any AI use to mitigate potential losses. The industry faces challenges in quantifying and managing systemic risks posed by AI failures, prompting insurers to adjust coverage approaches. Businesses deploying AI may bear more risk than anticipated as insurers and regulators adapt to the evolving landscape.