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Carriers move to exclude generative AI from standard policies
A survey cited by POWERS Insurance & Risk Management says fewer than half of organizations have a formal AI risk management framework, heightening the risk of D&O claims and coverage disputes.
Carriers are increasingly excluding generative AI from standard insurance policies, as corporate AI adoption has outpaced governance structures meant to manage the risks, according to Insurance Business. The outlet points to Gallagher's 2026 AI Adoption and Risk Survey, which found fewer than half of organizations have a formal AI risk management framework in place. Insurance Business says the gap is already showing up at renewals through D&O claims, coverage disputes, and exclusions. POWERS Insurance & Risk Management chief operating officer Tim Davis argues companies should start with a written AI policy that sets clear rules for acceptable tools and use cases, along with detailed restrictions on how AI may be used internally. Davis also calls for governance that includes an internal feedback mechanism so employees can flag improper usage to IT for investigation and correction. Davis adds that the platform used matters for risk, because consumer-facing AI tools do not provide the same data protections as enterprise deployments. He recommends most businesses use a closed enterprise-level instance, require existing employees to sign the policy, and incorporate it into onboarding. The outlet also notes that board-level understanding of how AI inaccuracies can translate into directors and officers legal exposure remains limited.