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Companies seek to reduce AI-related D&O liability - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Companies seek to reduce AI-related D&O liability by Richard Sine D&O , Emerging Risks , Technology Apr 14, 2026 Corporate leaders are eager to show they’re prepared for the earthquake that artificial intelligence is sending through many industries, but how they communicate that readiness can open them up to potential directors and officers liability exposures. Executives want to share how they’re responding to AI’s enormous opportunities and risks but shareholder lawyers are clocking every disclosure, prepared to pounce with a claim when share prices fall. If the AI “bubble” bursts, stock prices will plummet while lawsuits will likely surge. Directors and officers could get in trouble not only for overhyping AI opportunities but also for downplaying risks, D&O experts say. “You can move too fast on AI and risk weak controls or overstated claims,” says John Orr, San Francisco-based D&O liability product leader at Willis Towers Watson. “Or you can move too slow and risk falling behind.” The number of AI-related federal shareholder class actions more than doubled between 2021 and 2015, and several more have been filed this year. Most claim that leaders are overhyping the role of AI in their products or operations, known as “AI-washing.” More recently, some plaintiffs have claimed that companies are understating AI-related risks, such as the challenges of AI adoption. While AI is an emerging class-action catalyst, “the litigation patterns are familiar” when compared to previous catalysts such as environmental, social and governance issues, cybersecurity or the MeToo movement, Mr. Orr said. Dismissal rates and settlement figures are similar to the average for all shareholder suits, he said. But little is known about how judges view AI-related claims on the merits. “We’re still just scratching the surface,” said Michael Levine, a Washington-based partner at Hunton Andrews Kurth. Shareholder attorneys are not the only ones scrutinizing executives’ AI-related statements. The U.S. Securities and Exchange Commission has brought cases over false and misleading statements about AI use, and listed AI as a focus for fiscal-year 2026 examinations, saying it will “review for accuracy registrant representations regarding their AI capabilities.” With all the publicity surrounding AI-washing suits, D&O underwriters are taking a closer look at how corporate leaders are managing AI risk during renewals. “We’re certainly seeing a lot more diligence from D&O insurers in underwriting meetings, looking to understand what risk management controls are being implemented within the AI governance framework,” said Paul Figliozzi, who oversees management liability at Howden U.S. in New York. “They want to ensure that boards are documenting high-impact AI decisions at the board level.” Underwriters are still mostly asking general-use questions about AI, Mr. Orr said. The exception is technology companies or companies where AI is core to their products or services, which are attracting “granular questions about how AI drives revenue, how it may affect cost structures, timelines for integration and how resistant the business is to AI,” he said. As insurers come to grips with AI risk, some have begun issuing exclusions for AI, or providing affirmative coverage. In 2025, several insurers reportedly sought to include “absolute” AI exclusions in various liability policies. Generally, however, D&O insurers don’t exclude claims based on specific triggers such as AI or product recalls, Mr. Orr said. Assessing AI risk is difficult because the technology has spread across corporate units and functions, Mr. Levine of Hunton Andrews said. Risk assessments must be comprehensive and AI usage across the company should be managed and monitored by an officer or team that reports to the board. If companies want disclosures to be covered by D&O insurance, they need to be careful about who makes them. Depending on the company, these may be made by a chief technology officer, chief artificial intelligence officer or other leader who may not be covered by the company’s D&O policy, notes Geoffrey Fehling, a Boston-based partner at Hunton Andrews. Even more concerning is if disclosures are made by AI itself, which could produce “hallucinations” or be subject to AI-related policy exclusions. Mr. Levine noted that an Amsterdam-based tech company, Icecat, has appointed a bot called “Elsa Frozenbrain” as a “nonstatutory board member” and chief AI officer at the listed company. “Don’t be stupid and don’t blindly rely on AI, whether you’re filing a brief, a disclosure statement or a regulatory filing,” Mr. Levine said. While the technology is new, the guiding principles of oversight and governance are largely unchanged, Mr. Orr of WTW said. “It doesn’t come down to reinventing risk management,” he said. “It’s about applying customary governance discipline to a technology that’s become part of everyday business. It’s about expanding your discipline to this particular subject.” Related News NFP buys The Hamilton Group April 14, 2026 CompScience launches AI safety platform April 14, 2026 Eirion Risk introduces construction professional liability program April 14, 2026 Air ambulance costs soar despite limited use in workers compensation April 14, 2026 Liberty Mutual names Marsh to head specialty April 14, 2026 Aon names Ferreira, Williams US co-heads April 14, 2026 Mike Walsh appointed CEO at Keystone April 14, 2026 Marsh names CFO McGivney to additional roles April 14, 2026 EU agencies push cat pool backed by ILS April 14, 2026 Facebook-f X-twitter Linkedin-in Business Insurance is a singular, authoritative news and information source for executives focused upon risk management, risk transfer and risk financing. Never miss important news: Become a Business Insurance Online subscriber today Subscribe Now Information About Us Contact Advertise Privacy Policy Terms & Conditions Copyright 2026. 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