Armilla AI Launches Insurance Policy Covering AI Risks Without Historical Claims Data

Armilla AI Launches Insurance Policy Covering AI Risks Without Historical Claims Data

Armilla AI, a startup founded by AI veterans with 15 years of experience, has introduced a standalone insurance product specifically for artificial intelligence risks. Their policy offers third-party liability coverage for AI-related exposures and claims to underwrite these risks accurately—even without relying on years of historical claims data.

Karthik Ramakrishnan, Founder and CEO of Armilla, explained that their approach focuses on assessing risk at its source. By analyzing the AI model itself, they can project the likelihood of failure, which forms the basis of potential claims.

Why Traditional Policies Fall Short for AI Risks

Currently, many AI risks are "silently covered" under technology errors and omissions insurance policies. These policies do not fully address the unique challenges AI systems present, such as discriminatory outcomes or failures that result in financial loss.

Ramakrishnan pointed out that businesses could face lawsuits if an AI model causes harm—whether by discrimination or operational failure. This highlights the need for insurance products that specifically cover AI-driven liabilities.

Underwriting AI Risk Without Years of Data

Traditional insurance underwriting relies heavily on historical claims data to price risk, but this approach doesn’t work well for AI exposures that lack such data. Armilla’s solution is different: they have deployed hundreds of AI solutions across various industries and gathered extensive data on failure probabilities and associated losses.

This data-driven insight allows them to estimate risk more precisely based on different domains, use cases, and applications. It provides a foundation for pricing AI risk without waiting for years of claims experience.

Market Potential and Target Segments

Deloitte estimates that the AI insurance market could reach $5 billion by 2032. Armilla is focusing on small to medium-sized businesses up to larger mid-market companies. Their offering has attracted significant interest from highly regulated sectors such as financial services, healthcare, and manufacturing.

• Small to medium businesses
• Larger mid-market companies
• Financial services
• Healthcare
• Manufacturing

These industries face strict regulatory requirements and are increasingly adopting AI, which creates a pressing need for specialized insurance solutions.

Conclusion

Armilla AI’s approach to underwriting AI risks without years of claims data marks a practical shift in insurance for emerging technologies. By focusing on the AI model’s failure probability and related consequences, they address gaps left by traditional policies.

Insurance professionals working with technology and innovation will find this development worth monitoring as AI adoption grows across sectors.

For those interested in expanding their knowledge on AI and its implications in insurance, exploring targeted training courses can provide valuable insight. Visit Complete AI Training for resources tailored to professionals navigating AI risks.