Kathmandu. More than two-thirds of businesses worldwide are willing to pay 10% more in premiums for insurance policies that explicitly cover generative AI risks.
According to a report by the Geneva Association, more than 90 percent of respondents in a recent survey want insurance coverage specifically for AI or generative AI threats. The rapid adoption of generative AI is driving businesses to seek new types of insurance to cope with increasing logistical, ethical, and cybersecurity risks.
The report highlights that companies are rapidly integrating generative AI into customer service, product development, and internal operations. However, it has created new risks such as faulty AI outputs, biased recommendations, intellectual property infringement, and cyber threats (especially when AI systems generate inaccurate or copyrighted material), the report said.
Despite the promise of generative AI, many companies are facing implementation challenges such as talent shortages, poor data quality, and internal resistance. “Cybersecurity is a top concern across all markets,” said more than half of the respondents.
Other major risks include third-party liability and operational disruptions. Reputational damage is kept to a minimum. However, experts warn that it could have long-term effects.
The demand for insurance is high, especially in the medium and large companies in the technology and financial sector. In the past, companies with AI-related losses or high risk levels have shown the most interest. This increases the risk of adverse selection.
The underwriting of common AI risks poses new challenges for insurance companies. The report says that it is difficult to prove how companies manage AI risks. “This could potentially lead to misappropriation of information,” the report said.
As a result, insurance companies may limit coverage or adopt prudent pricing, such as in the early stages of cyber insurance. In response, insurance companies are adjusting cyber and liability policies to include losses associated with common AI. Some companies are testing parametric triggers and due-diligence protocols to improve underwriting and claims processes.
Some companies are also developing standalone AI insurance solutions. Which combines multiple coverages under a single insurance policy. However, this market is still new.
The report urges insurers to take initial steps by defining Gen AI risk thresholds, piloting modular insurance policy extensions, and working closely with technology providers and regulators to co-develop risk assessment frameworks.
The Geneva Association surveyed 600 corporate insurance decision-makers in China, France, Germany, Japan, the UK and the US to assess business awareness and demand for AI-related insurance. “Zen AI is gaining widespread adoption, but enthusiasm varies by region,” the report said, adding that businesses in China and the U.S. reported higher levels of trust and perceived usability, reflecting their advanced digital maturity. ’
