A businessman who tried to sue AIG for NIS 110 million will pay for AI hallucinations

The claim was based on an allegation that the insurance company allegedly exceeded the statutory time limit for waiting for operator response at call centers.

In a class action petition filed in May 2025, the plaintiff argued that the law requires an insurance company to ensure that its customers receive a telephone response time of no more than 6 minutes. In fact, he claims, the company’s customers wait an average of 13.8 minutes for a response from its representatives.

In its response to the motion to certify the claim, AIG rejected the petitioner’s arguments, stating that his interpretation of the law was fundamentally flawed. The insurer argued that the Capital Markets Authority’s regulations allowed for excess waiting times of 10-15% of total claims on an annual average, and that the company complied with these requirements throughout the period.

However, in the end, the petition was withdrawn by the plaintiff on the recommendation of the court without consideration on the merits, after it turned out that part of the procedural documents filed by the applicant through his representative were based on hallucinations of the AI, which invented references to non-existent court decisions.

Judge Hadas Ovadia decided “without hesitation” not to award personal legal costs against the applicant’s representative in favor of the state treasury, limiting the award to NIS 20,000 in legal costs to the defendant.