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AI exclusions create insurance gaps, opportunities for captives - 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 AI exclusions create insurance gaps, opportunities for captives by Gavin Souter Sarah Hopkins, left, James Wencil and Amy Antczak Alternative Risk Transfer/Captives , Cyber Risks , Technology Aug 18, 2026 BURLINGTON, Vermont — Insurers and captives use artificial intelligence to improve underwriting, analyze large volumes of data and strengthen internal controls, but its rapid adoption is also creating coverage gaps that could leave companies with unexpected liabilities. As commercial insurers add exclusions and restrictions for AI-related risks, captives could help fill some of those gaps, speakers said last week during a session at the Vermont Captive Insurance Association’s annual conference. However, limited claims experience makes it difficult to price the coverage appropriately. AI is already embedded in many companies, even when they have not formally adopted the technology, because employees and outside vendors often use it, said Sarah Hopkins, a Seattle-based senior associate at law firm Fenwick & West. Companies should establish policies governing AI use and examine how vendors are using their information rather than wait for regulations or industry practices to become settled, she said. “This isn’t written in stone; you can change policy tomorrow if you don’t like what you adopt today,” Ms. Hopkins said. AI can help captive insurers operate with relatively small staffs and analyze information that would otherwise be difficult or costly to process, said Amy Antczak, chief operating officer of GreenieRE, a Vermont-domiciled association captive focused on clean energy. GreenieRE uses AI to help its underwriting team analyze weather and other data. Historical loss information is becoming less useful for some climate-related risks as weather patterns change, and AI can help underwriters incorporate more current and forward-looking information, she said. “It’s really helpful in terms of our ability to run a lean team and have a lot of flexibility,” Ms. Antczak said. GreenieRE is also testing an AI-powered “audit bot” to review underwriting files provided by fronting insurers and managing general agents, she said. But companies adopting AI also should assess whether their insurance policies will respond when the technology contributes to a loss, the speakers said. AI-related exposures are increasingly being excluded, including in cyber coverage, Ms. Hopkins said. AI exposures were not contemplated when insurers originally priced general liability, cyber, errors and omissions, directors and officers liability and employment practices liability coverage, said James Wencil, a consulting actuary at Pinnacle Actuarial Resources. “If they were now to cover this new sort of emerging exposure, AI usage that’s spinning off these types of claims that weren’t considered, they’d be underpriced,” Mr. Wencil said. Unlike the emergence of so-called silent cyber risk, insurers are moving quickly to address AI risks, he said. Potential claims include privacy breaches when employees enter confidential information into public AI systems, intellectual property claims arising from AI-generated material or data used to train models, and losses caused when companies rely on inaccurate AI output, Mr. Wencil said. Contracts with vendors present another concern. Boilerplate agreements increasingly give vendors broad rights to use customer data, potentially including training their own AI models, Ms. Hopkins said. “You need to be paying attention to those provisions because even if nobody’s explicitly calling them out, they’re in most of the things you’re signing these days,” she said. Captives could provide an alternative when commercial policies exclude AI risks or available coverage does not fit a company’s exposures, Mr. Wencil said. “Captives are sort of the perfect solution for this,” because they offer the control and flexibility to address gaps while the commercial market develops, he said. Pricing, however, remains a significant obstacle because actuaries do not yet have a large body of AI claims data to estimate expected losses, Mr. Wencil said. Captives initially may also need conservative assumptions and relatively tight per-occurrence and aggregate limits, he said. Over time, though, a captive could function as a testing ground by retaining some AI risk and building its own claims experience, Mr. Wencil said. Related News Lower catastrophe losses buoy MS Re’s profit August 18, 2026 Global reinsurance capital reaches all-time high August 18, 2026 Middle East conflict cuts QIC’s profit August 18, 2026 Museum hit by $92M art theft August 18, 2026 Hormuz attacks raise fuel supply fears August 18, 2026 IRB-Brasil’s income grows as premiums dip August 18, 2026 Canada storm losses climb to $316M: CatIQ August 18, 2026 Convex posts $169M profit August 18, 2026 Gulf Insurance’s profits nearly double August 18, 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. 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