Pennsylvania added generative-AI developer and user liability to its surplus lines export list, removing the diligent-search step before those coverages go to the non-admitted market

What the notice actually does

Pennsylvania runs a surplus lines regime. In the ordinary case a licensee has to look for the coverage in the admitted market first, and be able to show they looked, before placing the risk with a non-admitted insurer. The export list is the carve-out from that step.

The August 1 notice adopts a new export list under section 1604(2)(ii) of The Insurance Company Law of 1921. Its operative sentence is short: "a diligent search among insurers admitted to do business in this Commonwealth is not required before placement of the coverages in the surplus lines market." That is the whole mechanism. A coverage gets on the list, and the search step falls away for that coverage.

Two generative-AI entries are now on that list. The list took effect the day it was published and stays in effect until the Department publishes a replacement, which on recent history is roughly every year to eighteen months.

The two new entries, verbatim

The list is organized by heading with indented sub-entries. The new heading and its two children read, in full:

Artificial Intelligence / Developers of Generative Artificial Intelligence (third-party liability and first-party coverage) / Users of Generative Artificial Intelligence (third-party liability and first-party coverage)

Three things are worth reading closely there. The scope word is generative, not AI generally, even though the parent heading is the broader term. The list reaches both sides of the market, the people building the models and the people using them. And each entry covers first-party as well as third-party, so it is not confined to liability to outsiders.

What the notice does not do is define any of those terms. There is no definition of developer, no definition of user, and no definition of generative artificial intelligence anywhere in the document. A company that fine-tunes a vendor model and resells it will not find its answer here.

What the Department declared, and what it did not

The notice is not silent on why items are listed, which matters because it is tempting to overread the silence in either direction. The preamble says the Commissioner "declares the following insurance coverages to be generally unavailable in the authorized market at the present, and thus exportable." So there is a stated predicate, and it is a market-availability predicate.

Read it precisely. The declaration is about availability in the authorized market at the present. It is not a finding that AI liability is uninsurable, and it is not a finding about any particular insured. Somebody can be listed and still be quoted by an admitted carrier tomorrow; nothing in the notice says otherwise.

Our reading, offered as our inference and not as the Department's finding: the recital is doing less bespoke work than it looks like it is. We pulled the April 5, 2025 notice and compared the preambles. The sentence is identical, word for word, in both. It is standing language that attaches to every heading on the list at once, and the same sentence currently covers dog bite liability, tattoo parlors and hunting clubs. Treating it as a considered regulatory judgment about the state of the AI insurance market specifically is reading more into the form than the form supports.

That said, something did have to happen for the heading to appear. A category does not get added to this list by accident, and the export list exists precisely for risks the admitted market is not readily writing. So the addition is a real signal about thin admitted capacity for generative-AI risk in Pennsylvania. It is a signal, inferred from the purpose of the mechanism. It is not a measurement, and the notice publishes no data, no submission count and no carrier survey behind it.

What changed since the April 2025 list

We compared the August 2026 list against the April 2025 list it supersedes, entry by entry. Two headings were added. Nothing was removed.

The additions are Artificial Intelligence, with its two generative-AI sub-entries, and Paratransit Insurance, with four sub-entries covering auto liability and physical damage, commercial general liability, professional liability, and monoline abuse or molestation coverage. Paratransit has nothing to do with AI and is worth flagging only so nobody reports this as a one-item update.

One entry that was already there is worth noting for contrast. Commercial Cyber Insurance, inclusive of first party and third party, was on the April 2025 list and remains on this one. So generative AI is not entering a list of exotica. It is joining the same shelf as cyber, which is a market that admitted carriers do write, at terms and limits many buyers do not like. That is closer to the correct mental model than uninsurable is.

What this does not do for the broker

A licensee reading this as blanket relief will get into trouble. The notice removes one requirement by name and says nothing at all about the rest of the surplus lines framework. Producer licensing, eligibility of the non-admitted insurer, premium tax and stamping obligations, notice and disclosure to the insured, filing duties: none of that is mentioned in this document, so none of it is touched by this document.

The practical read for a placement file is narrow. For a coverage on the list, the diligent-search step and its documentation come out of the workflow. Everything else stays. If your process assumed one export-list check clears the whole file, the check was always doing less work than it appeared to.

For a GC or risk manager, the useful thing here is evidentiary rather than operational. If a board asks whether the company's generative-AI exposure is insurable, this is a citable state-level datapoint that the coverage is understood to sit largely in the non-admitted market in at least one state, published in an official gazette with a docket number. It is not evidence that the exposure cannot be covered, and it says nothing about any other state. Pennsylvania's list binds Pennsylvania placements. Every state runs its own.

What we did not verify

We opened and read the primary source in full: the notice at 56 Pa.B. 4658, Pa.B. Doc. No. 26-1099, on the official Pennsylvania Code and Bulletin site, and every quotation above was character-matched against that text. We also opened the superseded April 5, 2025 notice at 55 Pa.B. 2697 in full and compared the two export lists entry by entry, which is where the two-additions, zero-removals finding comes from. We compared the two preambles directly and confirmed the declaration sentence is identical in both.

We did not open the full issue PDF, and we did not open the text of 40 P.S. section 991.1604 itself. So we are describing the statutory hook by the citation the notice gives, and we are not characterizing what else section 1604 requires of a surplus lines licensee beyond noting that the notice addresses only the diligent search. We also did not open the 2023 list at 53 Pa.B. 3805, so we can speak to the change since April 2025 and no further back. We did not contact Steve Yerger, the contact named in the notice, and we have no non-public information about why the heading was added.

We refuse to claim that Pennsylvania has found AI liability uninsurable, that admitted carriers will not write it, or that any specific company cannot obtain admitted coverage. The notice supports none of those. We refuse to extend any of this beyond Pennsylvania. Our reading that the addition signals thin admitted capacity is our inference from how the export list mechanism works, is marked as such above, and is not something the Department stated. We have no denominator for how much AI risk is placed in either market and we are not supplying one.

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