The emergence of AI insurance may be a necessity, because using AI in the real world has more to do with governance than capability.
The key question isn’t whether an AI can replicate the work of a software engineer — it’s whether society will allow it to, without proper mechanisms for allocating risk and accountability.
In other words: how is the duty of care distributed in a world of human-AI labor?
Pricing AI risk
If AI is to become deeply embedded in knowledge work and decision-making, it seems inevitable that a robust risk-pricing ecosystem will emerge. The ability to insure against AI-driven mistakes, failures, and liabilities will be crucial—not just for individuals and corporations but for the stability of the broader economy.
Perhaps this will resemble auto insurance:
- Just as it’s illegal to drive without, at minimum, third-party liability coverage, it may become illegal to “drive” (i.e., create or build with AI) without some baseline form of insurance.
- Different tiers of AI systems—ranging from small creative applications to large-scale enterprise decision-making—may require progressively more expensive and specialized policies.
At the highest levels—where billions of dollars of AI-processed knowledge work is at stake—the model may look more like maritime trade insurance.
- Historically, shipping goods across oceans carried massive financial and operational risks. The cost of potential ruin was too high to bear without mechanisms for transferring and distributing risk.
- The cost of ruin may be too high to engage in the business of “shipping” intelligence at scale without robust risk transfer mechanisms.
Inference needs insurance
In a world where a significant percentage of GDP is AI-augmented, mispriced risk could cause the trade of intelligence to screech to a halt.
One can imagine some black swan event — perhaps the discovery of a language model exploit that predictably causes hallucinations — to drastically increase premiums and catastrophically disrupt the supply of knowledge work.
Without liquid and robust insurance markets, businesses may freeze inference, fearing legal and financial exposure. Economic productivity gains enabled by AI could stall—not due to technical limitations, but due to an inability to govern and insure its risks effectively.