While the global rush to implement genAI shows no signs of slowing, new research highlights rising concerns among businesses that the tech is exposing cracks in legal, ethical, and cybersecurity foundations that they are not ready to meet.

Polling 600 corporate insurance decision-makers around the world, the Geneva Association discovered almost all (90%) are now looking to increase their cover for genAI-related risks, particularly concerning new categories of risk, like AI hallucinations, emergent biases, and unauthorised content replication.

The study, Gen AI Risks for Businesses: Exploring the Role for Insurance, found that two-thirds of businesses would pay considerably higher premiums for such coverage, of 10% or more, with demand apparently strongest among medium and large-scale enterprises.

With AI tech accelerating at pace, organisations are scrambling to find insurance solutions that can keep up with the emerging risks, and are looking to fill gaps that traditional policies weren’t built to cover.

For example, the report found that more than half (53%) of firms want solutions that integrate genAI risks into their existing cybersecurity policies, while around 42% think disruption caused by genAI should fall under an extension of business interruption insurance.

Meanwhile, more than 40% of insurance decision-makers said that there was potential for standalone AI insurance, hinting that there might soon be a growing market for policies dedicated to meeting AI-driven risk.

The report found that, for the moment, many firms are gambling with having no genAI insurance at all.

Of enterprise firms with more than 1,000 employees, almost half do not have any current insurance policies which cover risks related to AI, despite 71% of firms pushing the genAI into at least one function.

The problem is even more severe among the smallest businesses, with around 86% lacking any form of genAI cover, despite multiple studies finding that SMEs are adopting the tech with alacrity.

According to the Geneva Association, these figures bring implications for the insurance industry, where modular approaches and cross-sector partnerships will soon be critical to closing these significant protection gaps. 

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“Generative AI amplifies some existing risks and creates entirely new categories of exposure that extend beyond traditional insurance boundaries,” said Ruo Jia, director of digital technologies at the Geneva Association.

“Our survey shows strong demand for risk transfer solutions, especially from firms that have already experienced severe genAI failures, but it also highlights insurability challenges. 

“The task for insurers now is to define clear risk boundaries and pilot modular coverage models that can adapt to this evolving technology.”