Chaucer Group has launched a new third-party liability (TPL) insurance product with Armilla AI to address the risks of AI system underperformance. The cover, available to US insureds with global territorial limits, is led by Chaucer and protects against liabilities arising from issues such as AI hallucinations, model drift, and other deviations from expected behaviour. The policy also includes legal defence and liability protection for claims linked to AI performance failures, reflecting a growing demand for broader, more specialised coverage. This marks the second collaboration between Chaucer and Armilla, following a warranty-style product designed to meet rising market appetite for AI risk protection. The partnership began during Armilla’s participation in a Lloyd’s Lab insurtech cohort, where Chaucer supported the company’s development and sponsored its coverholder application at Lloyd’s. Tom Graham, head of partnership and innovation at Chaucer, says: “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.” Karthik Ramakrishnan, CEO of Armilla AI, describes the partnership as “a major milestone in our mission to make AI safer for everyone”. He says the new coverage empowers organisations to adopt advanced technology with greater confidence, backed by robust insurance that addresses the unique risks of AI.
