OpenAI, Anthropic Plan To Use Investor Funds To Settle Multibillion-Dollar Lawsuits, Emerging Risks: Report
Insurance professionals say AI model providers will struggle to secure protection for the full scale of damages they may need to pay out in the future.
AI startups OpenAI and Anthropic are considering using investor funds to settle their multi-billion-dollar lawsuits, as insurance coverage falls short, according to a report published by The Financial Times on Wednesday.
The two companies have traditional business insurance coverage in place, but insurance professionals said AI model providers will struggle to secure protection for the full scale of damages they may need to pay out in the future, according to the report.
OpenAI has tapped insurance broker Aon for up to $300 million in coverage for emerging AI-related risks, according to unnamed sources cited by the FT. Aon declined to comment on individual companies, but Kevin Kalinich, its head of cyber risk, speaking broadly for the insurance sector, said, “We don’t yet have enough capacity for [model] providers.”
“What they can’t afford to pay is if an AI provider makes a mistake that ends up as . . . a systemic, correlated, aggregated risk,” Kalinich was quoted as saying.
OpenAI has considered “self insurance”, or putting aside investor funding in order to expand its coverage, and establishing a “captive,” an insurance vehicle often used by large companies to manage emerging risks.
The ChatGPT operator is being sued by the New York Times and certain authors for copyright infringement, and by the parents of a 16-year-old who recently took his life after discussing with the chatbot.
Meanwhile, Amazon-backed Anthropic recently agreed to pay $1.5 billion to settle a class-action lawsuit with authors over their alleged use of pirated books to train AI models.
On Stocktwits, the retail sentiment was ‘bullish’ for OpenAI and ‘neutral’ for Anthropic.
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