1. Introduction
Artificial intelligence (AI) has now permeated nearly all aspects of human life. Looking toward the future, it can be said that its scope of influence will expand to such an extent that it may fully replace many human functions. Despite the rapid expansion and continuous improvement of AI technologies across various sectors, there remains a significant gap in addressing the legal liability challenges arising from the operation of these technologies.
This article aims to examine the concept of “AI insurance” as a potential solution for mitigating liabilities associated with artificial intelligence—an approach that simultaneously promotes innovation and safety. The primary objective is to establish a framework that not only encourages continuous development but also proactively prevents potential harm and, in the event of damage, ensures full compensation.
Research Questions
1. Is it possible to insure AI systems?
2. What are the main obstacles to insuring AI systems?
3. How can practical solutions overcome these obstacles?
2. Literature Review
The risks arising from artificial intelligence necessitate the development of new policies or the establishment of new insurance infrastructures. None of these proposals have yet received full approval from the legal and insurance communities, and insurance policies covering this technology remain in an experimental phase. In 1996, Karnow proposed one of the earliest models for AI insurance. According to this proposal, only registered AI systems would be covered by insurance, and programmers would be required to obtain certification and pay premiums for their AI systems prior to distribution and sale. Consequently, manufacturers would be obligated to purchase liability insurance policies to cover damages to third-parties caused by AI systems.
A more recent proposal concerns the use of AI in the medical field. This approach argues that a well-designed AI liability insurance scheme could reduce risks and uncertainties for stakeholders, thereby safeguarding the interests of patients, physicians, and hospitals. Numerous proposals have also been presented regarding mandatory insurance for autonomous vehicles.
However, Iranian law has not yet specifically addressed the issue of insuring AI systems. Therefore, this research examines the impact of the insurance industry on artificial intelligence and the feasibility of providing insurance coverage for damages resulting from AI operations. Given that scholars and legislators have not yet provided a satisfactory solution to the issue of liability arising from AI, this study explores the role of insurance in controlling and mitigating damages caused by artificial intelligence.
3. Research Methodology
This study employs a descriptive-analytical method to examine the insurability of AI systems and the impact of the insurance industry on artificial intelligence given the existing infrastructure. The article proposes solutions to overcome the obstacles faced by the insurance industry in insuring AI systems, with the aim of encouraging development and innovation, proactively preventing potential harm, and ensuring full compensation in the event of injury or damage.
4. Results and Discussion
The insurance industry is currently undergoing a necessary transformation to align itself with disruptive technologies. This transformation requires considerable time and effort to design insurance policies tailored to emerging risks. Such a complex shift is accompanied by numerous challenges and may encounter multiple obstacles that create uncertainty regarding its effectiveness. Nevertheless, the growing demand for efficient insurance policies—particularly in the field of artificial intelligence—is likely to motivate insurers and policyholders to collaboratively seek solutions tailored to these specific risks. Insurers are naturally inclined to develop coverage that promises profitability; therefore, they will likely adopt a cautious approach toward new AI-related insurance products, especially given the unpredictable nature of potential damages resulting from AI operations. Determining accurate premiums remains a major challenge, as assessing risks associated with AI technologies involves inherent uncertainties. Insurers must adopt strategic approaches to distribute these risks effectively. In this context, concepts such as “insurance pools” become significant, as they enable collective agreements among insurers to share risks arising from emerging technologies and contribute to market stabilization.
One of the key factors influencing the adoption of insurance policies for AI systems is the question of who exercises primary control over the technology. Depending on the circumstances and the type of system, the responsibility for obtaining insurance may fall on manufacturers or users. A common concern is that many individuals and businesses may delay purchasing insurance coverage until it becomes a legal requirement.
The challenges of AI insurance extend beyond the inherent difficulties of the insurance industry itself. These challenges include the unpredictable and often opaque nature of AI decision-making, as well as complex liability issues that may hinder the development of coherent insurance frameworks. The multilayered and intricate characteristics of AI have generated numerous disputes and difficulties in efforts to formulate effective liability solutions. Although the insurance industry has not yet fully grasped the implications of artificial intelligence, there is growing awareness that traditional insurance policies require modification and adaptation to effectively address emerging technological advancements. This necessity is particularly evident in the Iranian insurance market, where even older challenges—such as cybersecurity-related issues—have not yet been fully resolved.
Given the tangible consumer demand for AI-based insurance and the rapid pace of AI development, the need for the insurance industry to keep pace with these changes is increasingly apparent. Individuals and businesses seek deterrence and reassurance; insurance provides a sense of security and assures customers that they will be protected against unforeseen threats. When designing AI-related insurance products, careful attention must be paid to the specific characteristics of AI systems, the nature of their operations, and the associated risks. Each policy must be crafted with great precision and tailored to the unique needs of each client.
5. Conclusion
At first glance, the function of insurance may be perceived merely as a tool for compensating losses and reducing risk for the policyholder. However, its deeper impact can serve as an incentive for manufacturers to actively pursue risk-prevention and loss-mitigation strategies. In this way, insurance can play a regulatory role—one that, while providing necessary security, also creates a supportive environment for sustained innovation.
Despite the many challenges ahead, the insurance industry possesses the capacity to overcome these obstacles, particularly if supported by influential institutions. Consequently, the role of policymakers and regulatory authorities is crucial. Supervisory bodies—whether through legislation or by acting as reinsurers—can play a significant role in establishing the necessary infrastructure and incentives to support the development of insurance products aligned with the AI ecosystem.