top of page

AI and Insurance Applications

  • steve901879
  • Mar 4
  • 1 min read

Updated: Apr 12

AI is streamlining the insurance process, but when it comes to completing applications, brokers need to be careful. While automation can speed up data entry and reduce errors, it also shifts liability. If a broker (or an AI tool) fills out an application incorrectly, the company, not the client, may be held responsible for omissions or misrepresentations. Understanding where technology enhances efficiency versus where it introduces risk is critical for both brokers and their clients.

Applications: Every company has been frustrated by the insurance renewal process, and it all starts with your broker sending you a blank insurance application. They know you, have been your broker for years, but every renewal it’s like they forgot who you are. A new wave of AI tech is jumping in and taking this on. My firm is no different, but it may help all you tech companies understand why some brokers will reject new tech. It may even purchasers of insurance, to know why this was rejected for so long as a practice. Why Brokers Refused Its Painful for Brokers Too Yes, just like you, brokers hate filling out applications and sometimes laziness prevails. Tech is key here. But obviously there has to be a better excuse (outlined below). Risk Brokers take on risk they do not want when they complete applications for clients. If they make mistakes, and the client takes it as professional advice, then the broker is at risk when claims are later denied. Risk Errors on applications can lead to denials of claims. If the broker enters incorrect information, and the client/underwriter relies on it, the broker can be left holding liability. I’ll spare you the case law, but there is plenty. It’s sufficient to know that every [Management Liability] policy has an exclusion for material mistakes that affect the underwritten risk. If a broker makes the mistake, it is their risk too. So What Changed? One of three things: 1. Tech enabled brokers do not know they are picking up risk 2. They don’t care 3. The tech is better(?) Hopefully this article helps with 1., and I cannot help with 2. As to 3. I would say that tech does not change the risk. Best practice is still not to do it. But If you’re like me and taking on this risk, just make sure you do it correctly and over disclose to clients. Final note, if you are using AI, it absolutely does not mean it is correct.

 
 
 

Comments

bottom of page