A growing share of liability and cyber insurance policies will factor artificial intelligence risk into underwriting decisions by 2028, according to ScienceSoft, a Texas-based AI transformation and software engineering firm with 37 years of experience in AI and 14 years in insurance technology.
The company predicts 60% to 80% of new policies and renewals in errors and omissions (E&O), directors and officers (D&O), employment practices liability (EPL), and cyber insurance lines will incorporate AI risk assessments by the end of the decade. The forecast is directed at midsize U.S. insurers navigating AI-related coverage and underwriting changes.
The projection follows a sharp rise in recorded AI incidents: publicly documented cases surged 262% between 2022 and 2025, underscoring the expanding exposure insurers face as organizations deploy AI systems at scale.
Most midsize insurers are expected to continue addressing AI risk primarily through existing policy lines rather than standalone products, according to ScienceSoft. Approaches to making AI treatment explicit in policies include affirmative wording, AI exclusions, specialized endorsements, and dedicated AI insurance products, the report said.
ScienceSoft also outlined growth projections for a separate segment—dedicated AI-specific insurance. That market is projected to expand from roughly $40 million to $4.8 billion between 2024 and 2032, representing a compound annual growth rate of approximately 80%. Despite that pace, the report noted AI-specific insurance is expected to remain a small niche, unlikely to achieve mainstream status by 2032, accounting for an estimated 0.34% of commercial property and casualty premiums.
Several structural factors are restraining the development of standalone AI coverage, including unclear liability attribution, accumulation risk, limited historical loss data, and regulatory uncertainty, ScienceSoft said.
Underwriting is expected to adapt faster than coverage terms. Insurers are beginning to evaluate not merely whether a business uses AI, but how those systems are governed, their degree of autonomy, and what controls are in place. Those factors are expected to increasingly influence premiums, coverage conditions and risk-control requirements through 2028, the report added.
