Insurers Balk At Paying Out Huge Settlements For Claims Against AI Firms
(Wednesday October 08, 2025 @05:20PM (BeauHD)
from the risky-business dept.)
- Reference: 0179717134
- News link: https://news.slashdot.org/story/25/10/08/207203/insurers-balk-at-paying-out-huge-settlements-for-claims-against-ai-firms
- Source link:
An anonymous reader quotes a report from the Financial Times:
> OpenAI and Anthropic are considering using investor funds to settle potential claims from multibillion-dollar lawsuits, as insurers [1]balk at providing comprehensive coverage for the risks associated with artificial intelligence . The two US-based AI start-ups have traditional business insurance coverage in place, but insurance professionals said AI model providers will struggle to secure protection for the full scale of damages they may need to pay out in the future. OpenAI, which has tapped the world's second-largest insurance broker Aon for help, has secured cover of up to $300 million for emerging AI risks, according to people familiar with the company's policy. Another person familiar with the policy disputed that figure, saying it was much lower. But all agreed the amount fell far short of the coverage to insure against potential losses from a series of multibillion-dollar legal claims.
>
> [...] Two people with knowledge of the matter said OpenAI has considered "self insurance," or putting aside investor funding in order to expand its coverage. The company has raised nearly $60 billion to date, with a substantial amount of the funding contingent on a proposed corporate restructuring. One of those people said OpenAI had discussed setting up a "captive" -- a ringfenced insurance vehicle often used by large companies to manage emerging risks. Big tech companies such as Microsoft, Meta, and Google have used captives to cover Internet-era liabilities such as cyber or social media. Captives can also carry risks, since a substantial claim can deplete an underfunded captive, leaving the parent company vulnerable. OpenAI said it has insurance in place and is evaluating different insurance structures as the company grows, but does not currently have a captive and declined to comment on future plans.
[1] https://arstechnica.com/ai/2025/10/insurers-balk-at-paying-out-huge-settlements-for-claims-against-ai-firms/
> OpenAI and Anthropic are considering using investor funds to settle potential claims from multibillion-dollar lawsuits, as insurers [1]balk at providing comprehensive coverage for the risks associated with artificial intelligence . The two US-based AI start-ups have traditional business insurance coverage in place, but insurance professionals said AI model providers will struggle to secure protection for the full scale of damages they may need to pay out in the future. OpenAI, which has tapped the world's second-largest insurance broker Aon for help, has secured cover of up to $300 million for emerging AI risks, according to people familiar with the company's policy. Another person familiar with the policy disputed that figure, saying it was much lower. But all agreed the amount fell far short of the coverage to insure against potential losses from a series of multibillion-dollar legal claims.
>
> [...] Two people with knowledge of the matter said OpenAI has considered "self insurance," or putting aside investor funding in order to expand its coverage. The company has raised nearly $60 billion to date, with a substantial amount of the funding contingent on a proposed corporate restructuring. One of those people said OpenAI had discussed setting up a "captive" -- a ringfenced insurance vehicle often used by large companies to manage emerging risks. Big tech companies such as Microsoft, Meta, and Google have used captives to cover Internet-era liabilities such as cyber or social media. Captives can also carry risks, since a substantial claim can deplete an underfunded captive, leaving the parent company vulnerable. OpenAI said it has insurance in place and is evaluating different insurance structures as the company grows, but does not currently have a captive and declined to comment on future plans.
[1] https://arstechnica.com/ai/2025/10/insurers-balk-at-paying-out-huge-settlements-for-claims-against-ai-firms/
If your business is on the shoulders of everyone.. (Score:2)
by Fly Swatter ( 30498 )
They don't really deserve insurance for using everyone's data without permission, at least not at normal rates. Corporations are still allowed to go bankrupt last time I checked.
That bubble is gonna be loud when it goes, with a lot of shareholders in tears.
Re: If your business is on the shoulders of everyo (Score:2)
by Drethon ( 1445051 )
This was my thoughts. Insurance against bankruptcy seems like a horrible bet for the insurance company without massive premiums.
Headline too long (Score:2)
by JustAnotherOldGuy ( 4145623 )
The headline is needlessly long, all you needed was "Insurers Balk At Paying Out"
I'm not sure why they are worried (Score:2, Insightful)
So far the judges that have looked at it have ruled in favor of the AI companies saying that it's transformative.
Of course you can bet your ass if you or I stored millions of terabytes of copyrighted material in a modified database in order to produce derivative works we'd be in prison right and with a sentence now longer than most murderers.
But these are trillion dollar companies so they get a pass.
Re: (Score:2)
That's just the golden rule at work.
"He who has the gold, rules."
Re: (Score:2)
Because the potential payouts are huge, the risk is unknown, and the AI companies do not want to pay ridiculous amounts of money in premiums.