Chaucer Group, a global specialty insurance and reinsurance group, has partnered with Armilla AI, a provider of specialised insurance and risk management solutions for AI, to launch a new standalone third-party liability (TPL) insurance product.
The new product addresses the evolving risks of mechanical underperformance in AI systems and models, along with their associated liabilities.
Available to US insureds with global territorial limits, the binder is led by Chaucer.
Coverage includes hallucinations (false or misleading outputs), model drift (performance degradation over time), mechanical failures, and other deviations from expected AI behaviour. It also provides legal defence and liability protection for claims arising from such underperformance.
This launch builds on an earlier collaboration between the firms on a warranty-style product, developed in response to rising demand for broader liability protection. The partnership began when Armilla joined a Lloyd’s Lab cohort focused on Insurtech innovation, with Chaucer actively supporting Armilla’s growth since, including sponsoring its coverholder application at Lloyd’s.
Tom Graham, Head of Partnership and Innovation at Chaucer, said, “At Chaucer, we believe that AI is reshaping the risk landscape — and that requires fresh thinking from the insurance market. Our partnership with Armilla AI has enabled us to co-develop a product that not only recognises the complexities of AI underperformance but provides meaningful coverage that supports innovation, transparency, and accountability. This launch marks a pivotal step in how we insure the technologies of tomorrow.”
Karthik Ramakrishnan, CEO of Armilla AI, added, “Partnering with Chaucer marks a major milestone in our mission to make AI safer for everyone. Our new AI liability coverage empowers organisations to adopt cutting-edge technology; while knowing they’re protected against the unique risks AI can bring. At Armilla, we’ve pioneered advanced methodologies to identify and mitigate AI-related vulnerabilities—from early development to deployment at scale. We’re putting these insights into action through robust insurance coverage, enabling organisations to adopt AI responsibly and confidently push the boundaries of innovation.”
Originally published on Reinsurance News
