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, 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.

The published list includes two generative-AI entries. Its final paragraph states that it takes effect on publication and remains effective until a subsequent published list supersedes it. The notice sets no fixed replacement schedule.

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.

The notice supplies the Commissioner's stated market-availability declaration. It does not publish a carrier survey, submission count or capacity data explaining the AI addition. Those omissions limit what can be concluded about actual availability or the reasons for adding the heading.

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.

Commercial Cyber Insurance, inclusive of first-party and third-party coverage, appears in both lists. That comparison establishes continuity of the listed category; it does not establish current carrier terms, limits or market capacity.

What this does not do for the broker

The notice addresses the diligent search by name. It does not resolve producer licensing, insurer eligibility, premium tax, stamping, disclosure, filing or documentation questions. Their treatment requires checking the applicable provisions beyond this notice.

For a placement file, identify the listed coverage and the notice relied on. The search exemption should not be treated as a separate finding that every associated documentation or recordkeeping requirement disappears.

Risk managers can cite the notice for the named export categories and the Commissioner's declaration. It does not quantify the share of AI risk placed in either market or show that a particular exposure can or cannot obtain coverage. This article has not reviewed other states' requirements.

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.

The notice does not establish that AI liability is uninsurable, that admitted carriers will never write it or that a particular company cannot obtain admitted coverage. Nor does it quantify market capacity or settle documentation duties. We have not reviewed subsequent export lists or other states' requirements.

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