AI risks make some insurers wary of corporate liability

If AI does end up killing us all, or just compounds our daily havoc, the insurance industry would rather not pay the bill.

"AI-related harms are already emerging, including incorrect or misleading outputs, deepfakes, privacy violations, intellectual property disputes, fraud, product defects, and discriminatory decisions," observes the RAND Corporation, a non-profit research think tank, in a newly issued report.

"These harms create demand for insurance but do not fit neatly within existing insurance lines." Companies want to protect themselves from the financial liability of deploying unreliable, mendacious, amoral AI agents, but insurance companies have become wary about taking on that risk.

And if AI ends up being uninsurable, the AI industry will have to moderate its ambitions and sales targets while corporate customers delay AI projects to fulfill their fiduciary obligations.

RAND says its report was motivated by the mismatch between rapid enterprise adoption of AI and the fragmented market for insuring or not insuring AI usage, particularly in the US.

Apocalyptic scenarios aside, the report says that companies are already grappling with AI-related incidents and related litigation while insurers, regulators, brokers, and policyholders puzzle over risks, coverage, and rules.

Insurer W.

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Berkley has already introduced exclusions in its D&O (directors and officers), E&O (errors and omissions), and Fiduciary Liability insurance products to exclude coverage for "any actual or alleged use, deployment, or development of Artificial Intelligence." During the company's Q4 2025 earnings call, CEO W.

Robert Berkley highlighted the need for underwriters to understand "the impact that [new technologies like AI are] having on our insureds, what it means for risk, and our ability to fully understand that risk so we can control it, select it, and price for it." The RAND report observes that some insurance carriers are excluding AI-related harms, noting that in January 2026, Verisk/ISO – whose standardized forms appear in more than 80 percent of US property and casualty policies – introduced optional language carriers can adopt to exclude bodily injury, property damage, and other harms arising from generative AI.

Not all insurers are deciding not to cover AI harms.

As RAND points out, coverage gaps are being filled by new and existing companies that believe they have a handle on the risk calculations.

To illustrate those risks, the report points to the Artificial Intelligence Incident Database (AIIDB) which lists tral-world harm or near-harm caused by generative AI.

At the time of writing, the AIIDB lists 713 incidents drawn from more than 6,000 reports and covers AI use beyond chatbots.