Armilla Launches Affirmative AI Liability Insurance with Lloyd's Underwriter, Chaucer

TORONTO, April 30, 2025 /CNW/ - Armilla Insurance Services (Armilla), Coverholder at Lloyd's, today announced the launch of its AI Liability Insurance policy. Underwritten by certain underwriters at Lloyd's, including Chaucer, this pioneering policy provides affirmative coverage for AI.

"Businesses are racing to deploy AI, but their risk management and insurance tools haven't kept pace. There's a growing concern of 'silent AI cover' – the uncertainty of whether existing policies will respond to AI-specific failures, potentially mirroring the early, costly lessons of cyber risk," said Karthik Ramakrishnan, CEO of Armilla. "Our AI Liability Insurance provides clear, affirmative coverage. It's built from the ground up to address the specific ways AI can fail, giving businesses the confidence to innovate responsibly."

As AI adoption continues to surge, AI incidents have spurred over 150 lawsuits in the US in the last 5 years per researchers at George Washington University. AI regulations are proliferating and scrutiny intensifying, it's essential for AI adopters to protect themselves—regardless of fault.

Traditional insurance policies fall short on AI. Tech E&O policies often lack sufficient limits, place the ensuing liabilities on the user, and do not extend to customized models. Meanwhile, many enterprises lack blanket E&O coverage, leaving their internally developed AI solutions vulnerable to ambiguous legacy policy wording, potential disputes, and future exclusions.

Armilla's AI Liability Insurance addresses key AI-related exposures by innovating a novel, broadly affirmative trigger around the risk of the underperformance of AI applications, such as the failure of the AI solution to perform as intended, generate critical errors, hallucinations or inaccuracies leading to damages. Armilla's policy responses by covering legal costs and liabilities caused by AI failures. 

"The proliferation of AI technology creates novel challenges that demand innovative insurance solutions," commented Nasra Ahmed, Senior Innovation Manager at Chaucer. "Existing frameworks often leave businesses exposed. We are proud to partner with Armilla, leveraging their distinct technical insight to provide the market with a product that offers much-needed clarity and certainty for companies navigating the complexities of AI adoption."

By combining high aggregate limits with forward-thinking underwriting, Armilla and Chaucer are redefining how the insurance industry supports responsible AI development.
[ https://www.armilla.ai/coverage ]

About Armilla:

Armilla, coverholder at Lloyd's is the world's only managing general agent (MGA) exclusively focused on AI insurance. Armilla combines deep technical expertise in assessing AI risk with innovative insurance solutions. By innovating AI-specific insurance products, Armilla empowers AI pioneers to confidently deploy AI.

For more information, visit www.armilla.ai

About Chaucer:

Chaucer are a leading specialty (re)insurance group working with brokers, coverholders and clients to protect and support business activities around the world. Our services are accessed both through Lloyd's of London and the company markets. We are defined by an enterprising, bespoke approach to (re)insurance, enabled by the individual character, experience and imagination of our expert teams.

Chaucer is a member of the China Re Group and backed by their financial and operational resources. China Re is one of the world's largest reinsurance companies who outstanding and comprehensive strength is rated A (excellent) by AM Best and A (strong) by S&P Global Rating.

For more information, visit www.chaucergroup.com

SOURCE Armilla AI Inc.

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