In today’s AI-driven economy, companies are under increasing pressure to demonstrate responsible, secure, and compliant use of artificial intelligence. From regulatory crackdowns to public scrutiny, the stakes for AI misuse are higher than ever. But there’s a new tool on the horizon that can help mitigate these risks—ISO/IEC 42001, the first international standard for AI management systems.
While this standard is still gaining traction, forward-thinking companies are already recognizing an added benefit beyond compliance and governance: ISO 42001 can potentially lower Errors and Omissions (E&O) insurance premiums. Here’s why.
- ISO 42001 Builds Trust—Internally and Externally
At its core, ISO 42001 provides a systematic framework to manage the risks and responsibilities associated with AI systems. It aligns AI practices with a company’s broader risk management, security, legal, and ethical obligations. For insurers, that’s gold. A certified AI Management System shows that a company has not only acknowledged the risks of AI but also taken proactive, auditable steps to manage them.
In other words: ISO 42001 certification is a strong signal of trustworthiness—to customers, regulators, and insurance underwriters alike.
- Demonstrable Risk Controls = Better Underwriting
E&O insurance covers companies against claims of negligence, mistakes, or failure to perform professional duties—issues that can now arise from faulty or biased AI outputs. Insurers are increasingly scrutinizing how companies manage their AI tools. Do you have safeguards in place? Bias testing protocols? A documented incident response plan?
ISO 42001 requires organizations to establish and maintain policies for:
- Risk assessments at various stages of AI system development
- Clear roles and responsibilities for AI oversight
- Continual improvement through monitoring, audits, and reviews
These aren’t just paper exercises. They’re exactly the type of structured risk mitigation processes insurers look for when calculating premiums.
- Lower Claims = Lower Premiums
Let’s say your company deploys an AI system for HR, lending, or legal document analysis. If the model discriminates, gives incorrect advice, or fails in an edge case, you may face regulatory fines or civil claims. These are the exact triggers for E&O insurance payouts.
But with ISO 42001, you’re more likely to catch those issues early through pre-deployment stress testing, impact assessments, and blindspot evaluations. This means fewer claims and legal headaches down the line, which could translate into lower loss ratios for insurers—and ultimately, lower premiums for you.
- The Competitive Advantage of Being Insurable
As insurers adjust to the AI risk landscape, not every company will be viewed equally. ISO 42001 certification could become a key differentiator in risk-based pricing. In fact, some insurers are already piloting AI-specific underwriting criteria. Being early to adopt ISO 42001 can position your organization ahead of the curve, especially as E&O coverage becomes harder and more expensive to obtain for AI-driven businesses.
Just as companies with strong cybersecurity practices and ISO 27001 certifications enjoy favorable terms on cyber insurance, the same principle applies here.
The Bottom Line
ISO 42001 is not just about AI governance—it’s a strategic investment in your company’s risk profile. By aligning your AI operations with this international standard, you’re not only fostering trust and transparency but also creating a strong case for insurers that your organization is a lower risk. That can mean more favorable coverage terms, reduced E&O premiums, and greater long-term resilience.
In an era where AI risk is real—and rising—ISO 42001 offers both protection and opportunity. The companies that embrace it early won’t just avoid mistakes; they’ll outpace the competition.
Still wondering why you need ISO 42001? Take a look at some of the companies that have recently announced their ISO 42001 certification and why it is the hottest certification to get in 2025:
“ISO/IEC 42001 certification will be the hottest ticket in 2025, as organizations shift from AI buzz to tackling real security and compliance requirements of AI responsibility. ‘’, Fion Lee-Madan, co-founder of Fairly AI, AI Governance In 2025: Expert Predictions On Ethics, Tech, And Law, Forbes
Let Dalikoo help you achieve ISO 42001 and be your partner on your AI compliance journey.