Artificial intelligence insurance? This startup in Canada will cover the costs of AI mistakes
Armilla cited a 2024 incident where Air Canada was using an AI chatbot as part of its customer service system, and the AI completely fabricated a discount which it offered to customers – a judge then ruled that the airline had to honour the offer. — Reuters
Lloyds of London, acting through a Toronto-based startup called Armilla, has begun to offer a new type of insurance cover to companies for the artificial intelligence era: Its new policy can help cover against losses caused by AI.
While Lloyds, and its partner, are simply capitalising on the AI trend – in the same way they'd insure against other new phenomena, in an effort to drive their own revenues – the move is a reminder that AI is both powerful and still a potential business risk. And if you thought adopting AI tools would help you push down the cost of operating your business, the advent of this policy is also a reminder that you need to check if AI use might actually bump some of your costs (like insurance) up.
Armilla's policy is intended to help offset the cost of lawsuits against a particular company if it's sued by, say, a customer or a third party claiming harm thanks to an AI product, the Financial Times noted. The idea is to cover costs that could include payouts related to AI-caused damages and legal fees associated with any such lawsuit.
Armilla's CEO told the newspaper that the new insurance product may have an upside beyond protecting companies against certain AI losses. Karthik Ramakrishnan said he thinks it could even boost AI adoption rates because some outfits are reluctant to embrace the innovative new technology over fears that tools like chatbots will malfunction.
Armilla cited a 2024 incident where Air Canada was using an AI chatbot as part of its customer service system, and the AI completely fabricated a discount which it offered to customers – a judge then ruled that the airline had to honour the offer. The Lloyds-backed insurance policy would likely have offset some of these losses had the chatbot been deemed to have underperformed. But it's not a blanket policy, the FT noted, and the company wouldn't offer to cover risky or error-prone AIs – like any insurer wary of covering a 'lemon.'
Ramakrishnan explained the policy is offered once an AI model is assessed and the company is 'comfortable with its probability of degradation,' and then will only pay out compensation if the 'models degrade.' The FT also noted that some other insurers already build in cover for certain AI-connected losses as part of broader technology error policies, though these may include much more limited payouts than for other tech-related issues.
The consequences of a company acting on hallucinated information from an AI, where an AI just makes up a fake answer but tries to pass it off as truth, can be severe, 'leading to flawed decisions, financial losses, and damage to a company's reputation,' says industry news site PYMNTS. The outlet also noted that there are serious questions of accountability that may arise when an AI is responsible for this kind of error.
This sentiment echoes the warnings made by MJ Jiang, chief strategy officer at New York-based small business lending platform Credibly. In a recent interview with Inc, Jiang said that companies are at risk of serious legal consequences from AI hallucination-based errors, because you 'cannot eliminate, only mitigate, hallucinations.'
Companies using the tech should ask themselves who will get sued when an error is made by an AI? Jiang said they should have mitigation procedures in place to prevent such errors in the first place. In fact, she thinks that ' because GenAI cannot explain to you how it came up with the output, human governance will be essential in businesses where the use cases are of higher risk to the business.'
Other business experts have also warned that using AI is not a risk-free endeavor and have issued guidance on how to prepare businesses for AI compliance and any subsequent legal issues. Keeping these issues in mind when preparing your AI budget is a good idea. – Inc./Tribune News Service
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malay Mail
16 hours ago
- Malay Mail
VenHub Launches 24/7 AI-Powered Smart Store at Metro Transit Center at LAX, Leading the Next Era of Autonomous Retail in Travel and Transportation
[email protected] Los Angeles, California - Newsfile Corp. - June 6, 2025 - VenHub Global, Inc. ("VenHub" or the "Company"), a leader in fully autonomous, AI-powered retail, unveiled its flagship Smart Store at the LAX/Metro Transit Center at Los Angeles International Airport. The Smart Store brings secure, frictionless, and fully automated retail convenience to millions of travelers and transit riders moving through Los Angeles each in anticipation of the 2026 FIFA World Cup and 2028 Olympic and Paralympic Games, the installation places VenHub at the forefront of smart retail infrastructure as Los Angeles prepares to welcome the world."Retail should work for people, not the other way around," said Shahan Ohanessian, Founder & CEO of VenHub. "Launching our Smart Store at the Metro Transit Center at LAX represents much more than a store opening. It's about giving people access to what they need, exactly when they need it, with safety and simplicity built into every interaction. Whether you're a traveler heading to the terminal, a commuter catching a connection, or a parent needing essentials after hours, VenHub is ready to serve. Always open, always secure, and always designed around the customer."Ohanessian added, "Being first is not just a milestone, it's a responsibility. As leaders in unattended retail, it's our obligation to keep pushing the edge of what's possible. With over $300 million in Smart Store pre-orders across the U.S. and growing demand from enterprise partners around the world, we are scaling our production capacity to meet this extraordinary is a fully autonomous, AI-powered Smart Store that can be installed in under seven days and operates 24/7 without staff. Using robotics, machine vision, and IoT, each unit delivers a safe, secure, and lightning-fast shopping experience - completing transactions in as little as 90 seconds. Whether fixed or mobile, VenHub's Smart Stores intelligently adapt inventory and merchandising based on location, customer behavior, and time-of-day demand, setting a new standard for access, convenience, and future-ready view an enhanced version of this graphic, please visit:This launch marks VenHub's first deployment in partnership with LA Metro, with additional locations already being planned across Southern California. These Smart Stores will serve transit-connected communities across the region, offering a retail experience that is fast, secure, and completely contactless, available 24 hours a day, 365 days a year."Metro is committed to enhancing every step of our customers' journeys, and that includes the moments they spend in our stations," said Jennifer Vides, Chief Customer Experience Officer. "Partnering with VenHub at the LAX/Metro Transit Center station reflects our focus on innovation and our Board's directive to explore retail and other station-based amenities that improve the overall rider experience. VenHub's 24/7, AI-powered smart retail technology is a forward-thinking solution that adds convenience, engagement, and value to our customers as they travel the Metro system."This partnership underscores the power of combining public infrastructure with private innovation to elevate everyday convenience for millions of June 6, VenHub welcomed the public, government officials, and partners to its grand opening at the Metro Transit Center at LAX. Attendees interacted with the Smart Store, placed live orders, explored the robotics system in action, and met the team behind the view this video? Visit:VenHub is building the retail infrastructure of the future. With a bold vision to modernize access to goods and services, VenHub delivers scalable, autonomous Smart Store technology across the U.S. and beyond. From major metro regions to rural towns, fixed units to mobile deployments, VenHub brings automation, intelligence, and convenience wherever people need AI-powered Smart Stores operate 24/7 with no on-site employees, adapting dynamically to customer behavior, local conditions, and operator settings. With a focus on safety, speed, and scalability, VenHub is setting the new global standard for retail that never sleeps. Following its Southern California expansion, VenHub is preparing deployments for transit hubs and commercial sites in major cities across North America, the Middle East, and learn more, visit:VenHub, a division of VenHub Global, Inc. ("VenHub" or the "Company"), may make forward-looking statements regarding future events or the future financial perrmance of the Company in press releases, presentations, conference calls, or other"believes," "expects," "anticipates," "foresees," "forecasts," "estimates," "intends," "plans," "targets," or other words conveying future outcomes or forward-looking statements involve certain risks, uncertainties, and assumptions that are difficult to predict and beyond the Company's control. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including but not limited to changes in general economic conditions, the Company's ability to execute its business strategy, competitive pressures, unanticipated manufacturing or supply chain issues, compliance with regulatory requirements, and other risks detailed in the Company's public filings with the Securities and Exchange in these forward-looking statements should be regarded as a representation by VenHub or its management that the Company's objectives or plans will be achieved. VenHub undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable Barry, Alliance Advisors604-997-0965 The issuer is solely responsible for the content of this announcement. About VenHub Global Inc.
The Star
18 hours ago
- The Star
Yageo says it will protect technology if Shibaura purchase succeeds
Yageo's founder and Chairman Pierre Chen speaks at the company's headquarters in New Taipei City, Taiwan June 7, 2025. REUTERS/Wen-Yee Lee TAIPEI/TOKYO (Reuters) -Taiwan's Yageo said it will implement strict controls to prevent technology from leaking if it succeeds in acquiring Japan's Shibaura Electronics, responding to concerns in Japan over what the deal could mean for national security. Chairman Pierre Chen told reporters in Taipei on Saturday that the company will meet with Shibaura in mid-June in Tokyo to discuss potential cooperation. Yageo, the world's largest maker of chip resistors, launched an unsolicited tender offer for Shibaura in February, seeking full control of the Japanese firm, which specialises in thermistor technology. Yageo offered to buy Shibaura at 4,300 yen per share, valuing the company at more than 65 billion yen ($450 million). Spurning Yageo's overture, Shibaura tapped Japanese components supplier Minebea Mitsumi as a white knight. Minebea and Yageo entered a bidding war, with the latter now offering 6,200 yen. The stock closed at 6,100 yen on Friday. "Our strategy is to inject resources and strengthen R&D for advanced technologies. We're also preparing to make larger investments to expand their facilities in Japan," Chen said. Asked about Japan's national security concerns, he said: "We will implement strict controls to ensure technology does not leak." Unsolicited takeovers were once rare in Japan, where companies often mounted elaborate defences. The Japanese industry ministry's M&A guidelines in 2023 cracked down on what it considered excessive defence tactics, de-stigmatising unsolicited buyouts and leading some of such deals to succeed. Chen said that negotiations with Japan's Ministry of Economy, Trade and Industry had been going smoothly. He said that if Yageo acquires Shibaura, the deal would address a gap in its portfolio of thermistors, making Yageo's offerings more complete for global customers and helping Shibaura expand its access to markets outside of Japan. Yageo said it aims to ease the burden of managing smaller component suppliers for its major clients, including Apple and Nvidia, by offering more comprehensive product portfolios and solutions. Yageo is also the world's number three manufacturers of multilayer ceramic capacitors and provides key components used in Apple's iPhones, Nvidia's AI servers, and Tesla's electric vehicles. ($1 = 144.8500 yen) (Reporting by Wen-Yee Lee in Taipei and Makiko Yamazaki in Tokyo; Editing by William Mallard)
The Star
a day ago
- The Star
Human coders are still better than AI, says this expert developer
Your team members may be tempted to rely on AI to help them write code for your company, either for cost or speed rationales or because they lack particular expertise. But you should be wary. — Pixabay In the complex 'will AI steal my job?' debate, software developers are among the workers most immediately at risk from powerful AI tools. It's certainly looking like the tech sector wants to reduce the number of humans working those jobs. Bold statements from the likes of Meta's Mark Zuckerberg and Anthropic's Dario Amodei support this since both of them say AI is already able to take over some code-writing roles. But a new blog post from a prominent coding expert strongly disputes their arguments, and supports some AI critics' position that AI really can't code. Salvatore Sanfilippo, an Italian developer who created Redis (an online database which calls itself the 'world's fastest data platform' and is beloved by coders building real-time apps), published a blog post this week, provocatively titled 'Human coders are still better than LLMs.' His title refers to large language model systems that power AI chatbots like OpenAI's ChatGPT and Anthropic's Claude. Sanfilippo said he's 'not anti-AI' and actually does 'use LLMs routinely,' and explained some specific interactions he'd had with Google's Gemini AI about writing code. These left him convinced that AIs are 'incredibly behind human intelligence,' so he wanted to make a point about it. The billions invested in the technology and the potential upending of the workforce mean it's 'impossible to have balanced conversations' on the matter, he wrote. Sanfilippo blogged that he was trying to 'fix a complicated bug' in Redis's systems. He made an attempt himself, and then asked Gemini, 'hey, what we can do here? Is there a super fast way' to implement his fix? Then, using detailed examples of the kind of software he was working with and the problem he was trying to fix, he blogged about the back-and-forth dialogue he had with Gemini as he tried to coax it toward an acceptable answer. After numerous interactions where the AI couldn't improve on his idea or really help much, he said he 'asked Gemini to do an analysis of (his last idea, and it was finally happy.' We can ignore the detailed code itself and just concentrate on Sanfilippo's final paragraph. 'All this to say: I just finished the analysis and stopped to write this blog post, I'm not sure if I'm going to use this system (but likely yes), but, the creativity of humans still have an edge, we are capable of really thinking out of the box, envisioning strange and imprecise solutions that can work better than others,' he wrote. 'This is something that is extremely hard for LLMs.' Gemini was useful, he admitted, to simply 'verify' his bug-fix ideas, but it couldn't outperform him and actually solve the problem itself. This stance from an expert coder goes up against some other pro-AI statements. Zuckerberg has said he plans to fire mid-level coders from Meta to save money, employing AI instead. In March, Amodei hit the headlines when he boldly predicted that all code would be written by AIs inside a year. Meanwhile, on the flip side, a February report from Microsoft warned that young coders coming out of college were already so reliant on AI to help them that they failed to understand the hard computer science behind the systems they were working on –something that may trip them up if they encountered a complex issue like Sanfilippo's bug. Commenters on a piece talking about Sanfilippo's blog post on coding news site Hacker News broadly agreed with his argument. One commenter likened the issue to a popular meme about social media: 'You know that saying that the best way to get an answer online is to post a wrong answer? That's what LLMs do for me.' Another writer noted that AIs were useful because even though they give pretty terrible coding advice, 'It still saves me time, because even 50 percent accuracy is still half that I don't have to write myself.' Lastly, another coder pointed out a very human benefit from using AI: 'I have ADHD and starting is the hardest part for me. With an LLM it gets me from 0 to 20% (or more) and I can nail it for the rest. It's way less stressful for me to start now.' Why should you care about this? At first glance, it looks like a very inside-baseball discussion about specific coding issues. You should care because your team members may be tempted to rely on AI to help them write code for your company, either for cost or speed rationales or because they lack particular expertise. But you should be wary. AIs are known to be unreliable, and Sanfilippo's argument, supported by other coders' comments, point out that AI really isn't capable of certain key coding tasks. For now, at least, coders' jobs may be safe… and if your team does use AI to code, they should double and triple check the AI's advice before implementing it in your IT system. – Inc./Tribune News Service
