In short: MKIII, an AI-powered lending platform, needed lenders to trust its Loan Decision Model. After the model passed independent validation, MKIII began offering lenders a performance warranty on its accuracy. That warranty is insured through CLIP, Armilla's Contractual Liability for AI Performance Warranties. If accuracy falls below the agreed thresholds, MKIII compensates the lender, and CLIP reimburses MKIII for covered warranty payments. Lenders get a funded commitment, and MKIII doesn't carry all the financial downside itself.
Credit unions serve more than 143 million Americans and manage $2.37 trillion in assets. Many still struggle to expand lending despite strong borrower demand. Limited capital, regulatory constraints and outdated tools push them toward conservative credit decisions, even when the data supports wider access to credit.
MKIII's problem was not building an accurate model. It was earning enough institutional trust to get lenders to adopt one.
Before any guarantee was offered, the Loan Decision Model went through independent validation across performance, fairness and robustness. The validation measured how accurately the model predicts loan defaults across more than 4,000 borrower variables and 5 million historical loan records. Those results set the accuracy thresholds the guarantee is built on.
MKIII gives lenders a performance warranty: a contractual commitment that its model will meet the validated accuracy thresholds. CLIP insures that commitment. The structure has three parts, the same three any AI performance commitment needs:
1. The task: predicting loan defaults for lending decisions.
2. How success is measured: model accuracy against the thresholds set during validation.
3. What happens if it falls short: MKIII compensates the lender for verified losses, and CLIP reimburses MKIII for those covered warranty payments.
Because the warranty comes with the product, lenders get the guarantee without arranging any insurance themselves.
Trust and transparency
Lenders rely on model performance that is independently validated and backed by an insured warranty.
Capital efficiency
Warranty-backed assurance helps reduce perceived risk and capital reserve requirements.
Faster adoption
The insurance-backed guarantee removes the need for long pilot phases and builds confidence among risk and compliance teams.
Better access to credit
Credit unions can approve more borrowers responsibly, with a model guaranteed for accuracy and reliability.
Enterprise buyers increasingly ask AI vendors to put performance commitments in writing. MKIII shows a workable way to say yes: define the task, agree how success is measured, and back the remedy with CLIP rather than your own balance sheet. For buyers, an insured warranty shows the vendor is prepared to stand behind measurable results.
If customers are asking you for accuracy targets, SLAs or compensation terms, ask your broker whether CLIP could support those commitments.
Download the MKIII case study (PDF)
Armilla AI is an MGA purpose-built for AI liability insurance, insuring AI vendors and the enterprises that deploy AI. Alongside AI liability insurance, Armilla offers CLIP, which insures the performance warranties AI vendors give their customers.
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