AI Risk: Integrated, Not Standalone (Yet)
Industry analysis finds most AI exposure is being absorbed into existing commercial lines rather than spawning a broad standalone market. ScienceSoft projects 60 to 80 percent of new E&O, D&O, EPL and cyber policies will factor AI risk into underwriting by 2028. A narrow standalone market is growing fast from a small base: roughly $40 million in 2024 to an estimated $4.8 billion by 2032, but that would represent about 0.34 percent of total commercial P&C premiums. Note: ScienceSoft is an IT consultancy focused on underwriting systems, which informs its market view.
Underwriting Evolution and Policy Adaptations
Insurers are tightening policy language and raising expectations for corporate AI governance. The Insurance Services Office published standard generative AI exclusion forms in July 2025, and major carriers have widely adopted similar clauses across commercial policies. At the same time, some affirmative AI liability products are appearing, led by specialist suppliers such as HSB, creating a small standalone segment alongside integrated coverage changes.
Drivers: Rising Incidents and Demand for Clarity
Publicly recorded AI incidents jumped about 262 percent from 2022 to 2025. Litigation over algorithmic decisions, highlighted by cases like Mobley v. Workday, is sharpening questions about liability. Many organisations lack formal AI risk frameworks, producing a layer of silent risk that pushes insurers toward clearer exclusions and endorsements.
What This Means for Businesses and Insurers
- Businesses that deploy AI should demonstrate governance, documentation and controls to secure appropriate coverage.
- Underwriters will increasingly assess AI risk management processes as part of placement and pricing.
- Risk managers must monitor evolving policy wordings, emerging exclusions and the limited availability of affirmative AI products.
Bottom line: expect AI exposures to be treated as a feature of existing commercial lines for the foreseeable future, with a niche market of dedicated AI products growing but remaining small relative to total commercial P&C premium pools.
