A new survey of corporate insurance buyers reveals widespread interest in buying insurance to cover Gen AI risks—and a willingness to pay up 10-20 percent more in organization-wide insurance premiums for the coverage.
But the most willing buyers are those that are heavy users of Gen AI or who have already been involved in serious AI-related incidents, according to the report, “Gen AI Risks for Businesses: Exploring the role for insurance,” published by the Geneva Association, which warns insurance underwriters of the high possibility of adverse selection.
Much of the report is based on a survey of 600 corporate insurance decision-makers across China, France, Germany, Japan, the UK and the United States, providing useful breakdowns of potential buyers, their willingness to pay for insurance, their experiences with AI, and their views of their biggest AI risks by country, firm size and industry. The report also provides an overview of insurance coverage being offered today, and recommendations about how insurers should proceed in tapping into the opportunity to offer coverage while staying mindful of adverse selection and other risks.
Among the key takeaways:
- High insurance demand. Over 90 percent of businesses surveyed show interest in insurance cover for Gen AI risks.
- How much will they pay? More than two-thirds of respondents would pay at least 10 percent higher premiums for such coverage. A graphic in the report reveals that about 50 percent would pay 10-20 percent more, and more than 15 percent would pay more than 20 percent of their organization’s current insurance costs for Gen AI coverage.
- Risks identified. Survey respondents most commonly selected cybersecurity as the Gen AI-related risk they wish to cover (selected by somewhere between 50 and 60 percent of respondents). Coverage for third-party liability (liability to customers and suppliers) and business operations risks were next on the list, each selected by more than 50 percent of respondents. Reputational risk was much less important to respondents from a coverage standpoint (selected by 30 percent).
- Rapid adoption: 71 percent of surveyed businesses have implemented Gen AI in at least one function.
“Few technologies in history have spread as rapidly as Gen AI, yet its risks are complex and poorly understood,” said Jad Ariss, managing director of the Geneva Association, in a media statement about the report.
Demand Highest in U.S. and China
The survey results indicate that demand for insurance is highest in the U.S. and China, where respondents were also most likely to indicate that Gen AI was useful in their day-to-day work.
In both nations, between 60 and 70 percent of respondents said that Gen AI was “very useful” in their daily work. In stark contrast, less than 20 percent of respondents in Japan said Gen AI is “very useful,” and perceptions of usefulness were also low for respondents in France and Germany. The text of the report indicates that slower uptake in these three countries reflects lower trust, regulatory or cultural hurdles, and organizational resistance.