Aon has called for a coordinated, whole-of-government approach to regulating artificial intelligence (AI), warning that without clear oversight, AI risks could become uninsurable and undermine innovation. The appeal came from Kevin Kalinich, Aon’s Global Collaboration Leader for Intangible Assets, during testimony before a government committee on 30 July.
AI has already transformed productivity and decision-making across sectors, but Kalinich cautioned that it also introduces complex, fast-evolving threats—ranging from deepfakes and hallucinating language models to cyberattacks, IP infringements and automated system errors. Stanford’s 2025 AI Index Report recorded a 56% rise in AI-related incidents over the past year, heightening concerns.
Kalinich said these emerging risks pose unique challenges to the insurance industry, which traditionally relies on diversifiable, uncorrelated risk and predictive loss modelling. AI-related disruptions, such as mass liability claims or cyber failures, could create systemic, correlated losses that defy existing underwriting models.
Aon urged the creation of a national regulatory framework, combining state-led innovation with consistent standards. Kalinich highlighted the Model Bulletin adopted by the National Association of Insurance Commissioners (NAIC) in 2023 as a potential foundation for broader oversight. He also pointed to bipartisan legislative efforts, including the Secure AI Act and Senator Lummis’ bill requiring transparency from AI firms, as key steps toward responsible governance.
The firm is also investing in policy development at state level, using regulatory sandboxes to test AI insurance solutions that could guide national standards. Kalinich stressed the need for companies to maintain AI tool inventories, assign clear ownership, conduct performance audits, and document model inputs—practices that support both underwriting and regulatory clarity.
Aon CEO Greg Case echoed this message in a recent interview, noting that AI is opening access to new sources of capital—potentially unlocking funding from sovereign wealth and pension funds to support risk transfer. Citing AI’s use in Ukraine’s reconstruction effort, he described the technology as an “accelerator” of global resilience and capital mobilisation.
Industry bodies such as the NAIC continue to assess AI’s impact through working groups on data, innovation and cybersecurity, while exploring regulatory responses to balance consumer protection and innovation.
Despite early progress, Kalinich warned that insurance markets are still grappling with the challenge of pricing AI-related risk. The lack of actuarial data and intangible nature of many AI assets echoes the early years of auto insurance, suggesting a similar path of gradual market maturity. However, firms like Orbital Witness are already testing AI-backed guarantees in specialist sectors, signalling the beginning of commercial adaptation.
Aon’s overarching message is that AI regulation must evolve in tandem with technology. With the right governance, the firm believes AI can improve resilience and create new opportunities—provided the industry, regulators and innovators work together to manage its risks responsibly.
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