Artificial intelligence and (compulsory) insurance

This article discusses the compulsory liability insurance for AI-related harm proposed in the ongoing EU policy debate. We not only explain from the demand side why liability insurance would not be the only financial security needed to deal with the risks created by emerging technologies, but we also clarify from the supply side the obstacles concerning the application of liability insurance in the digital age. This article argues that, even if policymakers are determined to mandate liability insurance for AI-related risks, it must be established in a balanced and evidence-based manner. Compulsory financial security is only indicated when there is a risk that the activity may cause serious damage and could lead to insolvency.