COLORADO SPRINGS, Colorado — Insurance policy exclusions targeting artificial intelligence risks are struggling to gain traction as brokers and policyholders resist broad restrictions on a technology that is increasingly embedded in everyday business operations, industry executives say.
AI exclusions have emerged as the industry grapples with potential liabilities associated with the technology, but several executives said the market is generally seeking to address the exposures through underwriting rather than broad exclusions.
The executives spoke this week at the Insurance Leadership Forum, sponsored by the Council of Insurance Agents & Brokers.
AI exclusions are not gaining widespread acceptance among policyholders, said Marc Kunney, San Francisco-based chief client officer at EPIC Insurance Brokers & Consultants.
“AI isn’t the risk per se. AI is an acceleration or augmentation of the delivery, and so it’s really hard to exclude AI,” he said. “Every organization, every industry is using AI, so if you have an AI-related exclusion, what’s going to be covered?” Mr. Kunney said.
Some insurers have introduced affirmative AI coverage, but those policies should be examined closely because they can function as “cloaked exclusions,” specifying which AI-related perils are covered while excluding others, he said.
Pat Donnelly, Chicago-based head of risk and broking for North America at Willis, said he has not yet seen AI exclusions become prevalent in placements. Broad exclusions could be difficult to apply because AI is already integrated into many business activities, he said.
“AI is too embedded,” Mr. Donnelly said.
ISO, the insurance industry standards organization, filed optional general liability exclusions addressing generative AI exposures last year.
The exclusions appear more likely to be adopted by smaller insurers that routinely use ISO forms, said Alex Wells, CEO of Zurich North America.
“I think those are generally only being adopted by smaller carriers who automatically adopt things that ISO does,” he said.
Zurich has reviewed the endorsements but does not use blanket AI exclusions, Mr. Wells said.
“We prefer to think about AI as an underwriting question rather than a contract question,” he said, noting there is a difference between companies that use AI for their own operations and those developing AI services and products.
As case law develops around AI, the insurance coverage issues may evolve, Mr. Wells said.
Shawn Ram, chief revenue officer at cyber insurer Coalition, said he has seen numerous AI exclusions filed but not widely adopted. Some brokers have told Coalition they would move business if insurers imposed the restrictions, he said.
Insurers may also be reluctant to be among the first to impose an exclusion that could put them at a competitive disadvantage, Mr. Ram said. Coalition has affirmative AI coverage in its policies.
“In 2024, we announced that we are affirmatively covering AI exposures. We’ve only expanded that since then,” he said.
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