Insurers cap payouts for AI-related cyber losses and regulatory fines
Major insurers including QBE and Beazley are adding restrictions to coverage for cyber incidents and regulatory penalties tied to artificial intelligence, according to policy documents reviewed by the Financial Times. The moves reflect concerns about potential liabilities as AI technology becomes more embedded in corporate operations.
QBE introduced sub-limits for large language model jacking incidents, a type of attack where criminals break into company-operated LLMs to bypass usage fees. A cyber policy with $5 million in total coverage would provide only around $250,000 for LLM jacking losses under QBE's terms.
Beazley drafted similar restrictions targeting AI-related losses from regulatory breaches. Both insurers set these sub-limits at roughly 10 percent of the overall policy value, according to documents and broker accounts.
QBE said it is "not retreating" from AI risks and characterized the changes as enhancements for specific emerging exposures rather than narrowing core coverage. The insurer added that if an AI-related event triggers a conventional cyber incident, those resulting losses remain fully covered under the standard policy.
Beazley said the policy amendments were still under development and had not been applied to active policies.
Brokers worry about broader restrictions ahead
Brokers and lawyers representing corporate policyholders expressed concern that these sub-limits could expand beyond LLM jacking to restrict coverage for other developing AI risks. The provisions could reduce protection as new AI-related threats emerge.
Insurers maintain the sub-limits confirm AI risks are included within policy cover. However, the restrictions signal growing caution about underwriting exposure to a technology still evolving rapidly.
The restrictions follow earlier attempts by insurers to exclude AI-related losses entirely. AIG and other carriers previously sought regulatory approval from US authorities to remove AI coverage from corporate insurance policies.
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