A recent report by the Geneva Association reveals that nine out of ten businesses worldwide are interested in insurance coverage for risks related to Generative AI (Gen AI), reflecting its rapid adoption across various industries.

The report highlights that Gen AI not only amplifies existing risks but also introduces new exposure categories that challenge traditional insurance boundaries, requiring innovative risk management approaches.

A survey of 600 corporate insurance decision-makers across major economies shows that 71% of businesses have already implemented Gen AI, with over 90% expressing interest in insurance solutions for related risks, many willing to pay higher premiums.

Insurers are exploring both policy extensions and standalone AI insurance products, emphasizing the importance of modular coverage models and cross-sector partnerships to address protection gaps.

There is strong demand for risk transfer solutions, especially from firms that have experienced significant Gen AI failures, highlighting the need for insurers to define clear risk boundaries and develop adaptable, modular insurance models.

Market challenges for insuring Gen AI include difficulties in risk verification and the potential for large losses, similar to cyber insurance issues, which raises concerns about insurability.

The strongest demand for Gen AI insurance comes from medium and large firms in the technology and finance sectors, particularly in high-adoption markets, but insurers face challenges in accurately pricing and verifying these risks due to information asymmetry.

GA emphasizes the necessity of collaboration among insurers, regulators, and technology providers to develop frameworks that ensure safe and sustainable Gen AI adoption, including defining risk boundaries and piloting modular coverage options.

Insurers are responding by adapting existing policies, experimenting with parametric triggers, and developing standalone AI insurance products, although the market remains in its early stages.

Cybersecurity threats, third-party liabilities, and operational disruptions are the key risks associated with Gen AI, with cybersecurity concerns ranking as the highest priority among potential risks.