AI is creating new, uninsured risks. As businesses integrate large language models (LLMs) and automated decision-making into their operations, they face a new class of "silent AI" risks. These risks often fall between the cracks or are increasingly excluded from general liability (GL), professional indemnity (PI/E&O) and cyber policies. Consider these scenarios:
- What happens when an AI system output affects third parties by conducting copyright infringement?
- What if data is unintentionally disclosed causing personal and privacy injuries?
- Or when automated decisions and workflows generate errors and omissions?
At Gallagher Re, our AI (re)insurance initiative, comprised of specialists across multiple products and practices, is at the forefront of defining this emerging risk. We analyze the dynamic market, model scenarios and strategically implement innovative solutions that optimize your portfolio for risks originating from each of the three pillars of the AI value chain.
The three pillars of the AI value chain
The exposure is here. As a carrier or MGA do you have the confidence to write the risk?
There are two primary forms of liability exposure for AI deployers:
- Generative AI exposure: Manipulation and output failures
- Non-generative AI exposure: Model performance and decision liability
The industry is now grappling with a critical question. Should these generative and non-generative AI-related risks be managed solely by adapting current policies, or do they necessitate entirely new insurance solutions?
Our dedicated AI (re)insurance initiative is prepared for either direction:
- First, we are actively engaging with trading partners to establish clarity of coverage in existing lines of business.
- Second, as standard markets retract coverage to protect their balance sheets, we are sourcing standalone AI liability products to fulfil this critical need.
Our differentiating approach
From research such as Smart Systems, Blind Spots: Rethinking Insurance for the AI Era, to structuring unique capacity for new entrants, we help clients understand their risk and build resilience against the unseen consequences of algorithms.
Our AI (re)insurance initiative serves as a hub, leveraging our specialist resources across the business to concentrate solely on comprehending, managing and finding the opportunity generated by AI.
Key offerings
- Innovative thought leadership: We publish insights on the intersection of AI adoption and legal frameworks, keeping our clients ahead of regulatory shifts.
- Proprietary data modeling: In collaboration with our AI liability partner, we develop realistic disaster scenarios to understand how concentration risks, such as the failure of a single "foundation model," could trigger systemic losses across thousands of policies.
- Extensive benchmarking: We conduct wording analysis for existing portfolios against new exclusions to identify "silent AI" exposures.
- Focused wordings discussions: We actively engage with trading partners to understand their position on coverage within existing lines of business in order to work towards terms and conditions that are suitable for all. Clearly defined coverage and a widely endorsed exclusionary clause will prevent excessive non-concurrencies and help with future claims management.
- Unprecedented market access: As this standalone line develops, we have the relationships to structure innovative solutions and source the right capacity for your needs.
