Chaucer Group (“Chaucer”), the global specialty (re)insurance group, today announces the launch of a new, standalone third-party liability (TPL) insurance product in collaboration with Armilla AI (“Armilla”). It was created to address the evolving risk of the mechanical underperformance of AI systems and models, and their associated liabilities.
The product is available to US insureds with global territorial limits, with the binder led by Chaucer. It will cover hallucinations (false or misleading AI outputs), model drift (performance degradation over time), other mechanical failures or deviations from expected AI behaviour and legal defence and liability protection for claims arising from such underperformance.
This new TPL product builds on an earlier collaboration between both companies on a warranty style product which responded to increased market appetite for broader liability protection. The relationship began when Armilla was selected to join a Lloyd’s Lab cohort focused on Insurtech innovation, and Chaucer has actively supported Armilla’s growth since. This support included sponsorship of Armilla’s coverholder application at Lloyd’s.
Tom Graham, Head of Partnership and Innovation, Chaucer: “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, Armilla AI: “Partnering with Chaucer marks a major milestone in our mission to make AI safer for everyone. Our new AI liability coverage empowers organizations 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 organizations to adopt AI responsibly and confidently push the boundaries of innovation.”