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Insurers launch cover for losses caused by AI chatbot errors
- Lloyd's of London and the startup Armilla launched an AI liability insurance product on May 11 to cover losses from AI chatbot errors.
- The launch responds to increasing AI deployment risks, including costly hallucinations where chatbots produce confident but false information.
- The policies cover legal claims when lawsuits arise from harm caused by AI underperformance, with examples including Air Canada and Virgin Money chatbot incidents.
- Armilla's CEO, Karthik Ramakrishnan, explained coverage depends on significant AI performance drops, such as accuracy falling from 95% to 85%, with Chaucer and Lockton helping underwrite and distribute policies.
- This product marks an initial step towards formalizing AI liability risk management amid evolving regulations and may encourage broader AI adoption despite remaining pricing and coverage challenges.
15 Articles
15 Articles
Financial Times
Insurers launch cover for losses caused by AI chatbot errors
Policies will pay out for costs such as legal fees and court damages if AI tools underperform
Why New Insurance Products Fail and What You Can Do About It
Introduction The insurance industry is no stranger to challenges. While the development and release of a new product can be an exciting milestone, it often comes with unforeseen hurdles. These challenges, particularly the so-called “Day 2 issues,” can be a significant problem for carriers and TPAs (Third-Party Administrators) alike. Despite rigorous testing and quality assurance (QA) processes during development, the reality is that most new pro…
Insurers on the Lloyd's market in London for the first time offer special policies that cover damage caused by errors from AI chatbots. The article Lloyd's insurers provide protection for AI chatbot errors appeared first on THE-DECODER.de.
Canadian insurance broker Armilla has developed a new liability policy designed to financially protect companies against the consequences of potential malfunctions when using artificial intelligence (AI). The policy is a response to growing awareness of the dangers of "silent AI," the company says. It markets the insurance through Lloyd's London market. However, the coverage amount is manageable, for example, with regard to class action lawsuits.
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