Chaucer, a leading global specialty cyber underwriter, and Armilla AI, a pioneer in AI insurance and underwriting, today announced the launch of Vanguard AI, a coordinated insurance solution designed to address cyber, technology, and AI-related liability within a single, clearly defined framework.
Vanguard AI brings together Chaucer’s primary Cyber and Technology E&O coverage with Armilla’s standalone AI liability insurance. The structure uses predefined allocation rules to clarify how coverage responds when losses span cyber incidents, technology services failures, and AI system behavior, reducing ambiguity as organisations deploy AI at scale.
As AI systems move into customer-facing, decision-making, and agent-driven roles, insurers and policyholders are encountering loss scenarios that no longer align cleanly with traditional cyber or technology E&O policy constructs. Errors such as hallucinations, model drift, and automated decision failures can create financial, regulatory, and reputational harm even when no security breach, system intrusion or negligence has occurred.
Rather than expanding cyber policies to absorb these risks implicitly, Vanguard AI reflects a deliberate decision to treat AI liability as a distinct risk class and separate from cyber and technology exposures and addressed through dedicated coverage.
“From a cyber underwriting perspective, the risk isn’t that AI exists, it’s that AI exposure starts to distort coverage lines it was never priced for,” said Piers Tuggey, Head of Cyber at Chaucer. “Vanguard AI reflects a conscious decision to partner rather than stretch cyber policies beyond their original intent, while still giving clients a coherent response when risks overlap.”
Vanguard AI is led by Chaucer’s primary Cyber and Technology E&O framework, reflecting the firm’s long-standing role underwriting complex digital risk. Rather than relying on endorsements or exclusions, the structure deliberately separates AI-specific liability into its own coverage layer, preserving underwriting clarity across all three lines.
Under the coordinated structure:
- Chaucer’s Cyber and Technology E&O coverage remains the primary response for breach-driven cyber loss, business interruption, and technology services failures, including ransomware events, system outages, and professional services liability.
- AI-specific liability is carved out into a standalone policy, underwritten by Armilla Insurance Services Inc., coverholder at Lloyd’s, addressing loss scenarios driven by AI model behavior—such as erroneous outputs, model underperformance, or AI agent actions—where no cyber event has occurred.
- Dedicated AI limits protect cyber and technology towers, with AI liability aggregate limits of $25 million or more per organisation, and $10 million in Cyber and limits, ensure AI-driven losses do not erode traditional cyber or technology E&O capacity.
- Predefined allocation rules govern mixed scenarios, enabling claims to be allocated by harm when incidents span cyber events, technology failures, and AI system behavior, reducing disputes and claims friction.
The structure is supported by AI model certification, risk and compliance reporting, and access to established cyber security and legal response partners.
As AI-related claims begin to emerge in production environments, one of the most persistent challenges for policyholders has been post-loss uncertainty, whether an AI-driven failure belongs under cyber, technology E&O, or neither.
“What this structure enables is clarity at the moment it matters when a claim actually occurs,” said Karthik Ramakrishnan, CEO and Co-Founder of Armilla AI. “By making AI liability explicit and separate, policyholders avoid post-loss debates about whether an AI failure belongs in cyber, tech E&O, or nowhere at all.”
The launch of Vanguard AI reflects a broader shift in how insurers are approaching AI risk. As enterprises deploy generative AI systems and AI agents in live, customer-facing environments, AI liability is moving from an implicit or “silent” exposure within cyber and technology policies to an explicit underwriting consideration.
Vanguard AI represents one of the first coordinated primary structures designed specifically for this transition, treating AI liability not as an extension of cyber risk, but as a distinct exposure that requires its own coverage logic, limits, and claims framework.
Jamie Newton
Chaucer
+44(0)2027105 8258
jamie.newton@chaucergroup.com
Caroline Klein, Olivia Thomson, Finlay Gardner
Haggie Partners
+44(0)207562 4444
chaucer@haggiepartners.com
Karthik Ramakrishnan
Armilla AI
insurance@armilla.ai
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 whose 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
Armilla AI is a Lloyd’s Coverholder and Managing General Agent (MGA) specialising in underwriting and insurance solutions for artificial intelligence. Backed by A-rated global insurers, Armilla provides AI software performance warranties and standalone AI liability insurance, enabling organisations to adopt AI securely and responsibly. Insurance services are provided by Armilla Insurance Services, Inc., Newark, Delaware, United States of America. Insurance products are subject to underwriting approval and regulatory requirements and may not be available in all jurisdictions.
For more information, visit www.armilla.ai
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