Insurance
As U.S. insurers begin excluding AI risks from standard policies, businesses must urgently explore new options to secure definitive coverage. The Solution: Dedicated, clear-cut AI insurance cover.
Against a backdrop of heightened risk and fast-dwindling options from traditional carriers, businesses are finding routes to secure dedicated Generative AI insurance protection with specialised providers like Testudo, a Lloyd’s cover holder, launching soon.
Testudo provides financial protection against third-party lawsuits triggered by Generative AI outputs—whether that involves financial loss, property damage, defamation, copyright infringement, or unauthorized data disclosure. Uniquely, Testudo assesses exposures using a proprietary model that tracks global AI litigation trends, and other relevant external factors. This means that LLM evaluations are not required, and quotes are provided within 24 hours.
The AI Litigation Wave
A wave of AI litigation is breaking across America. Plaintiffs are filing diverse lawsuits with increasing frequency and with larger sums at stake. Notable examples include:
- A $1.5bn out-of-court settlement agreed by Anthropic in a class action brought by authors who accused the firm of copyright infringement, by improperly using their works for AI training data.
- Multiple lawsuits against OpenAI, ranging from wrongful death, involuntary manslaughter and negligence to copyright infringement cases brought by independent authors and The New York Times.
These cases demonstrate how quickly allegations can spiral into massive liability for Generative AI outputs.
The AI Reckoning Begins
While a handful of U.S. insurers are the first to reckon with AI risk, this is likely just the beginning. The UK and European markets are expected to follow suit at some point as unexpected AI losses hit their books. In London, the Lloyd’s Market Association has already surveyed insurers to estimate the scale of major AI loss scenarios.
Most insurers are only just beginning to grasp the potential for large AI claims. In the immediate future, companies deploying Generative AI should dissect their policy wordings to distinguish between what is clearly covered and what is not. Where AI coverage is confirmed, business leaders will need to assess whether their policy limit is sufficient.
Given the prevalence of exclusions, organizations are increasingly investigating standalone coverage for Generative AI. A key challenge for leaders is understanding how insurers will price their unique set of AI risks, and whether an invasive evaluation of the LLM is required in advance of offering insurance.
With Generative AI ubiquitous in operations, organizations may find that standalone Generative AI coverage offers the most reliable route to securing protection.
How can I get an AI insurance Quote?
As an enterprise deploying generative AI risk, speak to your broker or a member of the Testudo team to identify, quantify and transfer your AI exposure.
Next steps:
- The Testudo team is here to help you explore your AI insurance options. Get in touch to assess your AI exposure and how to manage your company’s risk.
- Check out our Research & Insights blog for more AI insurance news.
