Why insurance companies should encourage solid AI risk management instead of excluding it
Insurance exclusions for AI risk could reshape how Australian agencies and vendors price and transfer AI-related liability - worth watching as the market develops.
Key points
- Major US insurers are seeking regulatory permission to exclude AI-related risks from coverage.
- OECD argues insurers should incentivise good AI risk management rather than exclude AI risks entirely.
- Only an excerpt is available - full argument and any policy recommendations are not visible here.
Summary
An OECD AI Wonk Blog post argues that insurance providers should encourage robust AI risk management practices rather than exclude AI-related risks from coverage. It responds to recent moves by major US insurers including AIG, Great American, and WR Berkley to seek regulatory permission to explore AI exclusions. The OECD's position is that exclusion undermines incentives for good governance, though only a brief excerpt of the full argument is available for analysis.
Implications for Australian agencies
- Monitor Agencies involved in AI procurement or whole-of-government AI risk frameworks may want to monitor how AI insurance exclusion trends affect vendor liability arrangements and government risk transfer posture.
- Consider Risk and assurance teams could consider whether current AI project risk assessments account for the possibility that commercial AI risks become uninsurable or prohibitively expensive to insure.
Implications are AI-generated. Starting points, not advice.
"Why insurance companies should encourage solid AI risk management instead of excluding it" Source: OECD AI Wonk Blog Published: 17 December 2025 URL: https://wp.oecd.ai/why-insurance-companies-should-encourage-solid-ai-risk-management-instead-of-excluding-it/ An OECD AI Wonk Blog post argues that insurance providers should encourage robust AI risk management practices rather than exclude AI-related risks from coverage. It responds to recent moves by major US insurers including AIG, Great American, and WR Berkley to seek regulatory permission to explore AI exclusions. The OECD's position is that exclusion undermines incentives for good governance, though only a brief excerpt of the full argument is available for analysis. Implications for Australian agencies: - [Monitor] Agencies involved in AI procurement or whole-of-government AI risk frameworks may want to monitor how AI insurance exclusion trends affect vendor liability arrangements and government risk transfer posture. - [Consider] Risk and assurance teams could consider whether current AI project risk assessments account for the possibility that commercial AI risks become uninsurable or prohibitively expensive to insure. Retrieved from SIMS, 18 May 2026.