Companies Explore Alternative Insurance and “Captive” Vehicles Amid Multibillion-Dollar Lawsuits
San Francisco, CA – Leading artificial intelligence developers OpenAI and Anthropic are reportedly considering leveraging investor funds to address potential claims stemming from several multibillion-dollar lawsuits, as traditional insurers show reluctance to provide comprehensive coverage for the burgeoning legal risks associated with AI. The Financial Times reported on Wednesday that both companies are exploring innovative solutions to manage these significant liabilities.
According to the report, OpenAI has discussed setting aside investor capital to expand its insurance coverage and is even considering establishing a “captive” insurance vehicle – a common strategy employed by large corporations to self-insure against emerging risks. While OpenAI currently holds coverage of up to $300 million for AI-related risks through major insurance broker Aon, this amount is deemed substantially insufficient to cover potential losses from the major legal claims it currently faces.
Facing a Wave of Litigation
OpenAI is currently embroiled in lawsuits from the New York Times and numerous authors who allege their copyrighted content was used without consent to train AI models. Additionally, the company is facing a wrongful death lawsuit filed by the parents of a 16-year-old, who tragically died by suicide after allegedly interacting with OpenAI’s ChatGPT tool about methods.
Anthropic is also utilizing a portion of its own funds to settle a $1.5 billion class-action lawsuit brought by authors. This lawsuit claims that Anthropic’s AI models were trained using pirated books.
Billions in Backing, But New Challenges Emerge
Both AI firms have attracted tens of billions of dollars in funding this year. OpenAI has secured significant commitments from SoftBank Group Corp. and NVIDIA Corporation. Microsoft Corporation, a major backer since 2019, has reportedly scaled back its funding recently due to disagreements over OpenAI’s transition to a for-profit organization. Anthropic also boasts strong support from major tech players, including Amazon.com Inc and Alphabet Inc.
The move to consider using investor funds for legal settlements underscores the rapidly evolving landscape of AI development, where technological advancement is now closely followed by complex legal and ethical challenges that require robust financial strategies to manage.
