84% of Companies Report AI Failures. 90% Would Value AI Insurance.
A recent survey by the Geneva Association explores attitudes toward insuring against Gen AI risks. 600 business representatives involved in corporate insurance decision-making took part.
When asked what types of failures or issues they’d experienced or heard about when using Gen AI, some of the top concerns were:
- Inaccurate or misleading information.
- Difficulty integrating with existing systems.
- Lack of consistency in responses.
- Technical glitches or system downtime.
- Poor handling of unique or complex cases.
- Misinterpretation of customer intent or queries.
- Biased or discriminatory outputs.
- Copyright / IP infringements.
Only ~16% said they’d never experienced an AI failure.
Over 90% of participants said they would value insurance to protect against Gen AI risks. They said that cybersecurity risks were the most important to cover. Operational risks and liability risks to customers and suppliers were also high priority. IP, regulatory, and reputational risks followed.
Large companies proved more likely to have policies that cover Gen AI risks. Over 50% of organizations with over 1000 employees said these risks were covered, while nearly 90% of companies with less than 20 employees weren’t protected.
Implications for brokers and their clients:
- Review existing cyber, tech E&O, and professional liability policies to confirm whether Gen AI-related incidents are explicitly covered.
- Consider business interruption insurance in case Gen-AI systems lead to operational disruption.
- Seek insurance providers that have expertise underwriting for AI risks.
Source: The Geneva Association. (October 2, 2025). Gen AI Risks for Businesses: Exploring the role for insurance.
“Industrial-scale Data Laundering” in the Quest to Train AI Models
Reddit licenses its data to approved partners like Google and OpenAI. Perplexity isn’t on that list and is now facing a lawsuit. Reddit claims that it collaborated with a third-party data scraping service to access content without authorization, despite receiving a cease-and-desist letter last year.
The company lists three possible scraping partners (Oxylabs in Lithuania, AWMProxy in Russia, and SerpApi in Texas) and alleges that Perplexity worked with at least one of them.
Reddit’s chief legal officer Ben Lee argues that the growing demand for high-quality human content “has fueled an industrial-scale ‘data laundering’ economy.”
Implications for brokers and their clients:
- Secure coverage that explicitly protects against claims related to IP infringement.
- Ensure third-party data providers have their own IP liability insurance.
- Ensure the costs of regulatory defense and crisis management are covered.
Source: Reuters. (October 23, 2025). Reddit sues Perplexity for scraping data to train AI system.
Fintech Firm Faces Legal Action Over “Digital Payday Loans” That Triggered Debt Spiral
The City of Baltimore has launched a lawsuit against the fintech firm MoneyLion Technologies Inc., accusing it of trapping “some of the city’s most financially precarious residents in an exploitative cycle of debt” through a “digital-age payday lending scheme.”
The scheme coaxed residents into taking out loans that were marketed as ‘zero-interest’, yet customers had to agree to pay “tips” and other fees. These exceeded the state’s APR limit by more than ten times. The company’s use of misleading language has been branded as a manipulation tactic.
Implications for brokers and their clients:
- Ensure D&O coverage includes protection for executives and directors accused of enabling predatory practices.
- Review media liability policies to confirm whether claims of misleading advertising are covered.
- Consider coverage for reputational harm to help restore public trust in case of a claim.
Source: Yahoo News. (October 9, 2025). City Of Baltimore Files Lawsuit Against MoneyLion, Accusing Fintech Lending Company Of Trapping Residents In A ‘Exploitative Cycle Of Debt’.
Biotech Firm to Pay $1.25 Million for Misleading Drug Safety Claims
FibroGen will pay a $1.25 million penalty for false and misleading statements about the drug roxadusat, which was a potential treatment for anemia in chronic kidney disease.
The SEC announced the settlement in a case involving the company’s previous chief medical officer, Kin-Hung Peony Yu. Dr Yu was accused of misleading investors from 2019-2021 about the drug’s cardiovascular safety, claiming that studies proved it to be safer than the main existing treatment.
Implications for brokers and their clients:
- Biotech companies should ensure adequate coverage in the case of investor claims about misrepresentation.
- Regulators will pursue executives for how clinical results are communicated, not just for the science itself. Ensure D&O policies explicitly cover these investigations.
- Ensure policies are coordinated to avoid finger-pointing between providers.
Source: The Pharma Letter. (September 12, 2025). $1.25 million penalty for FibroGen over ‘false and misleading statements’ case.
Regulators Probe Fintech After Misleading Statements and Stock Volatility
Mercurity Fintech Holding Inc. has promoted itself as an innovator in blockchain infrastructure and digital asset services. It’s made claims about joint ventures in AI hardware, and acquisitions that would expand its presence in traditional and digital finance.
The company and its executives are now under investigation for making misleading statements or omitting material information between November 2024 and October 2025. In a number of press releases, it discussed strong growth potential and multiple ambitious initiatives.
Concerns escalated after a May 2025 report flagged inconsistent financial disclosures, questionable partnerships, and limited revenue transparency, triggering stocks to fall by 22%.
In July, the company cancelled a US$43.7 million offering citing “market conditions and unforeseen challenges.” Its stock fell a further 23% on October 15 and 22% on October 22 after reports that a senior executive sold shares soon after promoting a planned index listing.
Implications for brokers and their clients:
- Ensure D&O responds to both regulatory investigations and shareholder derivative actions.
- If an executive financially benefits from misleading claims, some policies may decline coverage under fraudulent acts exclusions. Consider crime extensions that cover employee dishonesty and protect the company if an executive improperly benefits from share activity.
- Ensure misrepresentation and warranties insurance is in place ahead of any M&A activity.
Source: Claim Depot. (October 24, 2025). Mercurity Fintech Holding Inc. Securities Lawsuit Investigation.
Growing Optimism in DC as CLARITY Act Gains Momentum
The proposed Digital Asset Market Clarity Act (sometimes referred to as the market structure bill) has gained renewed traction. In a CNBC interview, Coinbase CEO Brian Armstrong described recent meetings with Republican and Democratic senators as “very productive,” and expressed optimism that it could be finalized by Thanksgiving.
The legislation aims to clearly separate which tokens should be treated as securities and which as commodities. Under its provisions, sufficiently decentralized assets would fall under CFTC oversight and centralized or early-stage tokens would remain securities regulated by the SEC. The bill also addresses gaps around DeFi, secondary market trading, and institutional custody.
Several key figures share Armstrong’s optimism including Senate Banking Committee spokesperson Jeff Naft, who described the meetings as productive, and Senator Cynthia Lummis (R-WY), a key sponsor of the initiative.
Despite these positive signals, market-based predictions put only around 20% probability on the bill being signed into law by the end of the year (down from 87% in July).
Implications for brokers and their clients:
- Review existing coverage strategies to confirm whether they match the regulatory category of the asset or platform.
- Prepare for uncertainty in the transition period after the bill is passed. Obtain cover for regulatory scrutiny, especially when holding assets classed as securities.
- Seek crypto asset insurance providers with expertise in crypto regulation.
Source: Crypto News. (October 23, 2025). Crypto Market Structure Bill Gains Bipartisan Momentum — Coinbase CEO Sees Progress by Thanksgiving.
