Source: TechCrunch

TechCrunch provides a deep dive into the growing reluctance of the insurance industry to offer coverage for artificial intelligence systems, citing the technology as "too risky." Major insurers are finding it increasingly difficult to quantify the potential damages caused by AI, particularly generative models known for "hallucinations" or fabricating information. The article cites a specific legal nightmare where an AI system falsely accused a solar company of legal improprieties, leading to potential defamation claims that are hard to predict and expensive to defend.

The core legal issue identified is the lack of foreseeability and the "black box" nature of neural networks, which prevents actuaries from calculating risk premiums accurately . Without a stable insurance market, AI developers and deployers face unlimited liability exposure, which could severely hamper enterprise adoption. The article suggests that unless legal frameworks clarify liability caps or standard of care definitions for AI, the insurance market may continue to withdraw coverage, leaving companies to self-insure against potentially catastrophic algorithmic errors.