I don't think the adverse selection problem is anywhere near as serious as the author seems to think--insurance companies aren't selling superior knowledge of their client's situation--they're selling against their client's massively different risk appetite.
I expect home insurance to cost more than it pays out (both in median and mean terms) but I take the negative-value deal to protect against rare financially ruinous outcomes.
Quality underwriting and minimizing adverse selection gives an insurance company a massive advantage over competitor insurance companies but it doesn't make or break the market its own.
I'm also not sold on model provider diversity being the measure of risk diversity-surely most of the risk is coming from application errors and not failures of "safety" tuning of models (which are mostly about preventing LLMs from saying things you wouldn't want in the newspaper--I assume AI E&O isn't interested in ensuring reputation risk)
I expect home insurance to cost more than it pays out (both in median and mean terms) but I take the negative-value deal to protect against rare financially ruinous outcomes.
Quality underwriting and minimizing adverse selection gives an insurance company a massive advantage over competitor insurance companies but it doesn't make or break the market its own.
I'm also not sold on model provider diversity being the measure of risk diversity-surely most of the risk is coming from application errors and not failures of "safety" tuning of models (which are mostly about preventing LLMs from saying things you wouldn't want in the newspaper--I assume AI E&O isn't interested in ensuring reputation risk)