Businesses are embedding generative AI (Gen AI) at speed across products, services and internal operations, unlocking opportunities for innovation but also creating new categories of risk.
A new report from the Geneva Association, Gen AI Risks for Businesses: Exploring the role for insurance, shed light on how corporate insurance buyers perceive these risks and what they expect from insurers.
The survey of 600 corporate insurance decision-makers across China, France, Germany, Japan, the UK and the US found that 71% of businesses have already deployed Gen AI in at least one function. Alongside this rapid adoption, more than 90% expressed interest in dedicated insurance cover for AI-related exposures, with two-thirds prepared to pay at least 10% higher premiums for such protection.
Cybersecurity was cited as the most pressing Gen AI risk, followed by third-party liabilities and operational disruption. However, verifying exposures and quantifying potential losses remains difficult, raising questions similar to those seen in the early stages of cyber insurance development.
Like cyber, Gen AI has the potential for correlated losses on a systemic scale. These uncertainties make pricing, reserving, and capacity allocation challenging. Exclusions and narrow wordings are already being discussed in the market, but risk transfer alone is unlikely to be sufficient without greater risk transparency.
Insurers are beginning to address these exposures through policy extensions and early-stage standalone AI products.
The report noted that modular coverage structures and cross-sector partnerships will be critical to narrowing protection gaps and creating sustainable solutions. This mirrors the trajectory of cyber insurance, which evolved from add-ons to standalone policies as underwriting expertise matured.
According to Jad Ariss, managing director of the Geneva Association, the speed of Gen AI adoption is unprecedented, while its risks are still poorly understood. He said the report provides insurers with insights into business demand, enabling them to anticipate client needs and play a central role in ensuring safe and sustainable AI adoption.
Ruo (Alex) Jia, director of digital technologies at the Geneva Association and lead author of the report, stressed that Gen AI not only amplifies existing exposures but also creates entirely new categories of risk. He noted that insurers face the challenge of defining clear risk boundaries and testing modular coverage models that can evolve alongside the technology.
The findings highlight strong demand for protection but also underline the complexities of insurability. As businesses increasingly depend on Gen AI, insurers will need to balance innovation in product design with careful risk selection and pricing. Drawing on lessons from cyber insurance, Gen AI may follow a similar path, requiring years of data, collaboration, and experimentation before insurers achieve scale and stability.
