Major insurers Berkshire Hathaway and Chubb have officially received the green light from state regulators to exclude certain AI-related losses from commercial insurance policies starting in 2026.
This decision is a pivotal moment for both the insurance and tech industries. First, it formally shifts the rapidly growing and hard-to-predict financial risks of AI from insurers back onto the companies that develop or use AI technologies. These companies will now need to either bear the risk themselves, a practice known as self-insurance, or seek out highly specialized (and likely expensive) standalone AI insurance policies. Second, it shows that regulators are allowing insurers to treat catastrophic AI risks as 'systemic'—widespread and interconnected—much like how they began excluding acts of cyber warfare from standard policies a few years ago.
The groundwork for this change was laid earlier. The key enabler was the introduction of standardized AI exclusion forms by the Insurance Services Office (ISO) on January 1, 2026. These pre-made templates provided a clear path for insurers to file for AI carve-outs with state regulators. This move didn't happen in a vacuum, though. It followed reports from late 2025 that other major insurers like AIG and W.R. Berkley were already seeking to limit their exposure to what they termed 'systemic and correlated' AI risks.
Furthermore, the regulatory environment added a sense of urgency. While the White House was exploring federal oversight for AI, the National Association of Insurance Commissioners (NAIC) reinforced that insurance regulation remains at the state level. This dynamic encouraged carriers to quickly secure approvals from state authorities before any potential federal rules could change the landscape. Chubb’s own strong financial performance and disciplined underwriting approach, as seen in its latest earnings report, also provided context for this proactive move to fence off unpredictable, long-tail risks.
In essence, the insurance market is actively building a firewall around risks it cannot yet fully model or price. This forces the broader business world to confront the true cost and liability of deploying artificial intelligence.
- Glossary
- P&C combined ratio: A measure of profitability for a property and casualty (P&C) insurer. A ratio below 100% indicates that the company is making an underwriting profit, while a ratio above 100% means it is paying out more in claims than it is receiving in premiums.
- Endorsements/Exclusions: An endorsement is an amendment or addition to an existing insurance policy that changes its terms or scope. An exclusion is a provision that eliminates coverage for certain risks, perils, or properties.
- Systemic Risk: The risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system.