Insurers balk at paying out settlements for claims against AI firms
10 hours ago
- #legal risks
- #nuclear verdicts
- #AI insurance
- OpenAI and Anthropic may use investor funds to settle potential multibillion-dollar lawsuits due to insufficient insurance coverage for AI risks.
- Traditional business insurance is in place, but AI model providers struggle to secure full coverage for potential future damages.
- OpenAI has secured up to $300 million in coverage for emerging AI risks, though some dispute this figure as too low.
- Aon, OpenAI's insurance broker, acknowledges the insurance sector lacks sufficient capacity for AI model providers.
- Insurers are wary of systemic, correlated risks from AI mistakes, which could lead to massive payouts.
- The reluctance to provide comprehensive AI coverage stems from the unprecedented scale of potential claims faced by young tech companies.
- The risk is heightened by the increasing prevalence of 'nuclear verdicts'—massive damages awarded against large US companies.