US business insurance provider Vouch has launched a new artificial intelligence policy, targeting AI-focused startups.
The product, called AI Insurance, is specifically aimed at tech firms that are developing, testing or launching AI-related tools, features and platforms. Its primary objective is to provide cover in case of litigation.
Moreover, the insurance provides “a layer of protection” that enables the insured startup to innovate faster, explained John Wallace, chief insurance officer at Vouch.
He told QA Financial that “in just half a year, we have seen a surge in AI startups, going from 10% to 70% of the new companies we work with.”
The launch of the AI Insurance product “shows how quick we are to spot and respond to new risks and potential coverage deficiencies in emerging industries,” Wallace added.
“The AI industry cannot afford to wait the years it typically takes insurance to catch up.”
John Wallace
The insurance offers coverage for financial losses from AI products and related services, which include top-of-mind risks such as large language model bugs or hallucinations and algorithmic bias.
The policy also includes regulatory investigations or related lawsuits, as well as claims of intellectual property infringement in systems that utilise AI algorithms.
Wallace stressed the product can also pay for defence costs and damages, “irrespective of fault.”
He was keen to stress the US-based firm will handle the claims so startups can conserve capital and maintain momentum.
“The launch of AI Insurance solidifies the company’s commitment to fuelling the startup economy through innovative insurance solutions,” Wallace noted.
In addition, his colleague, Sophie McNaught, director of AI at Vouch, pointed out that “when you’re a typical SaaS company, missing a quarter of progress to a lawsuit is a setback. For AI companies, it’s existential.”
Therefore, she called her firm’s new product “a critical financial backstop that helps AI startups innovate boldly and survive challenges.”
Cyber insurance space
Not just AI but the wider IT security and related tech sector is more and more on the radar of insurers.
As a result, the cyber insurance marketplace is becoming increasingly granular in its risk management and pricing.
At one end of the scale, some risks are becoming un-insurable. On the other hand, cybersecurity events generate countless data points that can be aggregated and analysed to assess the maturity of a firm’s DevSecOps practices.
Financial firms are able to do more to prioritise app security and data management, according to their own business priorities and risks.
There is no doubt cyber risk insurance products are evolving; the impact of last year’s high-profile vulnerabilities including Log4j and the Microsoft Exchange Zero Day and how firms can best embed security into their DevOps platforms and processes by structuring risk information.
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