Can Companies Insure Against AI's Growing Risks?

Artificial intelligence systems create a variety of technical, legal, and financial risks for the people and companies that use, develop, and maintain them. Lawsuits involving AI are proliferating in number and diversity given the increasing application of AI in many broad areas. These lawsuits raise complicated questions about who is responsible for these AI systems and who should pay for any resulting liability, as well as what role insurers should have in settling these costs. The MIT AI risk repository has classified over 1,700 different risks and tracks the annual number of AI-related incidents, which have been increasing over time. Experts warn of possible profound and far-reaching safety risks from AI beyond those already being experienced, including the potential for AI to assist malicious actors in developing cyber, biological, or chemical weapons, to inflict physical harm through autonomous agents, and to drive large-scale financial fraud. AI systems are already giving rise to major legal claims and settlements related to intellectual property, safety, and security. Several high-profile lawsuits have alleged that the developers of prominent large language models violated copyright protections in scraping training data for their models from the Web. Anthropic agreed to a $1.5 billion settlement to settle a copyright infringement lawsuit. A class-action copyright infringement lawsuit against Meta was filed in May 2026. Another significant IP case is pending against OpenAI. In addition to intellectual property-related lawsuits, LLM companies have been charged with helping people commit suicide or murder by failing to put in place appropriate safeguards. When 16-year-old Adam Raine committed suicide in April 2025 after a series of interactions about his mental health with OpenAI's ChatGPT, his parents sued OpenAI for building its product with features intentionally designed to foster psychological dependency. Also in 2025, a jury in Florida ruled that Tesla was partially responsible for a fatal car crash involving its autopilot software and awarded the victims more than $240 million in damages. The largest AI companies are struggling to acquire as much insurance coverage as they would like to help shield them against the potential risks associated with their products. Some AI companies have considered self-insuring by designating investor funds to help cover these costs. Anthropic is reportedly using some of its own funds to cover the $1.5 billion settlement. Insurers are often not confident in their ability to cover large AI-related losses because they do not have reliable data on these incidents that they can use to predict the risk and because they fear that the costs associated with AI-related risks could be exceedingly high. Many existing insurance policies, including cyber insurance and commercial general liability insurance, already cover many risks associated with AI. Some insurers have tried to limit their exposure to AI risks by excluding coverage for certain types of AI-related incidents from their products, while others are developing and marketing new AI-specific insurance coverage. The challenges of insuring against AI risks parallel those seen with the recent evolution of cyber insurance. Insurers initially lacked reliable historical data to model cyber losses amid rapid technological change. Regulations to promote better information and disclosure regarding AI risks and events could expand the domains in which insurers can price and manage safety risks.