The insurability of AI-related risks: implications from the recent legislation in the European Union

In recent years, the EU has been focussing on adapting its regulatory and liability regime to the challenges presented by various AI applications. The new legal framework will generate profound influence, not only on deterrence effects but also on demand for financial coverage. Insurance will continue to play an indispensable role in terms of shifting the different risks posed by AI. However, it remains unclear how the conditions of insurability will be improved or even worsened in the aftermath of new legislation. This article provides a comprehensive analysis to unveil how the new regulation and liability regime in the EU can help insurers to properly assess AI risks and, more importantly, explains the extent to which the new rules can still reduce the foreseeability of risks by presenting additional legal/casual uncertainties and adverse selection and moral hazard problems.