Armilla AI newsletter

No.184: Eight states sue OpenAI over ChatGPT safety Eight state attorneys general have sued OpenAI under consumer-protection and public-nuisance laws, while the U.S. Federal Trade Commission is seeking safety-incident records from OpenAI and Anthropic. Separate reports show agents spending funds from another wallet, deleting a television season's completed edit and inventing underwriting answers to produce an insurance quote. Anthropic granted METR employee-like access, Sierra demonstrated a scoped agent-to-agent mortgage workflow, and Anthropic deployed a model that reviews its own conversations for possible misuse. A policy debate over strict liability asks whether developers should pay for harm regardless of negligence. The commercial requirement: buyers, insurers and regulators need records that show what an agent was allowed to do, what it actually did, which control intervened and who accepted the remaining risk. FEATURED Insurance analysis separates affirmative AI cover from policy silence Business Model Analyst examined how AI losses may enter cyber, D&O, CGL and tech E&O insurance. Silent AI coverage means a policy neither expressly includes nor excludes an AI-related loss, so the result depends on existing definitions, exclusions and the facts of the claim. The article notes that Verisk's Insurance Services Office made three optional generative-AI endorsements available with January 2026 edition dates. Firms should inspect their own renewal endorsements rather than assume the risk is covered or removed. The article identifies Armilla as a Lloyd's coverholder focused on affirmative AI liability and cites available limits of up to US$25 million per organization. For buyers, the practical issue is whether each AI failure mode maps to an intended policy response rather than a disputed absence of wording. Firms should review policy wording, endorsements, contractual-liability exclusions and employment practices liability insurance restrictions, then document where each material loss scenario is intended to land. TOP STORIES Eight states sue OpenAI over alleged ChatGPT harms A bipartisan group of eight state attorneys general filed separate lawsuits against OpenAI, alleging that ChatGPT harmed residents and misled users about product safety. The states include Arizona, Arkansas, Idaho, Iowa, Kansas, Montana, Nebraska and West Virginia. Their complaints invoke state consumer-protection laws and allege that ChatGPT's agreeable, engaging design can reinforce delusions or encourage dangerous conduct, claims OpenAI will have an opportunity to contest. The states also allege public nuisance and seek civil penalties, damages and changes to how the system operates. Some complaints ask courts to restrict development of self-improving models unless OpenAI can demonstrate that the systems remain aligned with human values. Reuters described the filings as the most significant coordinated state action against an AI company to date. The cases remain at the complaint stage, so the allegations and legal violations have not been established. Product claims, model-behaviour evidence and consumer-protection duties now sit in the same case file. Vendors and deployers need version-specific evaluations, warning records, escalation logs and evidence that post-release safeguards address the uses described in their marketing. FTC seeks safety-incident records from OpenAI and Anthropic The U.S. Federal Trade Commission sent civil investigative demands to OpenAI and Anthropic, Reuters and Axios reported. A civil investigative demand is a compulsory request for information used to investigate a possible legal violation before the agency decides whether to bring a case. The requests seek documents connected to recent safety incidents and potential consumer-protection violations, according to the reports. Reuters also reported that the FTC plans to compel testimony from executives at the two labs and from METR, an independent model-evaluati