AI Job Loss Insurance: Parametric Policy

Singularity, backed by Y Combinator, has introduced a parametric coverage option to protect against income loss due to artificial intelligence (AI). The SingularityShield Income Cover is described as the first income-protection policy designed for workers whose jobs are eliminated by AI-driven automation.

Singularity aims to offer an insurance product to help workers whose jobs are lost due to AI. The insurance uses parametric triggers for payouts. The company’s AI job loss insurance policies feature a dual-trigger mechanism based on its AI-Displacement Risk Index (AIDR) and evidence of involuntary lay off from occupation.

The parametric trigger requires the AIDR to surpass an agreed threshold, and the employee to lose their job with evidence of a separation notice being filed. Unlike traditional income protection, SingularityShield Income Cover needs no lengthy claims assessment, so policyholders can get confirmation and receive benefits on their payday.

The parametric policy pays out up to 50% of net pay on every payday once coverage is triggered, for terms of 3, 6, or 12 months. Singularity constructs its AIDR using data sources to measure AI's impact on occupations and updates it regularly. It uses data from corporate filings, earnings releases, call transcripts, government data, and market signals.

Singularity said that this dual-trigger mechanism, informed by corporate, official, and market data, ensures payouts are directly linked to AI’s impact on job roles and an individual’s employment status, with no adjusters or paper claims required.

The parametric AI job loss insurance is first available to knowledge workers in the UK and US, with plans to expand. The company will partner with insurers and reinsurers, such as Lloyd’s capacity or US admitted carriers.