We (Flo & Rudolf) spent a month fleshing out the idea of an insurance-for-AI company. We talked to 15 people in the insurance industry, and did 20 customer interviews. We decided not to continue, but we think it's still a very promising idea and that maybe someone else should do this. This post describes our findings.

The idea

Theory of change

To reduce AI risks, it would be good if we understood risks well, and if some organisation existed that could incentivise the use of safer AI practices. An insurance company that sells insurance policies for AI use cases has a financial incentive to understand concrete AI risks & harms well, because this feeds into its pricing. This company would also be incentivised to encourage companies to adopt safer AI practices, and could incentivise this by offering lower premiums in return. Like many cyber-insurance companies, it could also provide [...]

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Outline:

(00:28) The idea

(00:32) Theory of change

(01:12) Concrete path

(04:55) How insurance works

(04:59) Why insurance

(07:27) Capital efficiency in insurance comes from scale

(09:19) The insurance industry is complicated and allows for startups

(11:19) General liability exceptions are key for new insurance products

(12:10) Our ideas for pricing risk

(15:43) Notes on professional indemnity insurance for law

(17:38) Relevant Stakeholders

(18:04) Findings

(18:07) Customer demand

(19:45) Findings about insurance

(22:52) Cruxes

(24:22) Alternative approaches

(24:26) Labs / Big Tech as reinsurers

(28:13) Selling a risk model rather than an insurance policy

(29:52) Should AI evaluation / auditing orgs do this?

(30:07) Acknowledgements

The original text contained 3 images which were described by AI.

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First published:
September 21st, 2024

Source:
https://www.lesswrong.com/posts/WFHg6ecDthErtuAJj/investigating-an-insurance-for-ai-startup

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“Investigating an insurance-for-AI startup ” by L Rudolf L, Florence Hinder

LessWrong (30+ Karma)

“Investigating an insurance-for-AI startup ” by L Rudolf L, Florence Hinder