AI Risk Insurance Solutions and Challenges

This technical report discusses the emerging challenges and solutions related to AI risk insurance, particularly focusing on the risks associated with AI hallucinations. The document outlines how the global insurance industry is responding to these challenges, with examples such as PICC Property and Casualty's launch of generative AI content infringement liability insurance. It highlights the collaboration between academic institutions and insurance companies to develop frameworks for AI risk insurance. The report further details the complexities of pricing AI-related risks, emphasizing the need for new actuarial methods to quantify the frequency of model errors and the impact of data drift. Additionally, it addresses the importance of establishing robust AI governance frameworks and the potential for systemic risks arising from widespread use of similar AI models. The report concludes by comparing the future of AI insurance to that of cyber insurance, noting that while technology cannot fully mitigate these risks, appropriate insurance solutions can help manage their consequences.