E&O Implications of Automation, AI, and Insurtech

Technology and artificial intelligence is transforming how insurance agencies operate—from quoting to client communication. Tools like ChatGPT, CRM automations, AI-powered assistants, policy checking and coverage comparisons, chatbot-based service portals and more are designed to save time and improve consistency. However, they can also introduce new and often overlooked E&O exposures.

Automation Doesn’t Eliminate Liability
Some agents may assume that if technology generates an incorrect quote or misses a coverage recommendation, the tech is to blame—not them. In reality, the legal responsibility typically remains with the agent, not the technology vendor (review contracts for hold-harmless and limitation-of-liability clauses). Courts and E&O carriers often view automation tools as extensions of the agency’s workflow—not as replacements for a licensed agent’s judgment.

While automation, AI and insurtech can save time and differentiate one agency from its competitors, the risks involved show the importance of double-checking and reviewing the actions or output of the tools you may use in your day-to-day workflows.

Common Technology-Related E&O Risks

• Incorrect Quotes from Quoting Platforms
  • Pre-filled data or default coverage limits may not reflect the client’s actual needs. If the agent doesn’t review or validate the quote before presenting it, they could be held liable for coverage gaps or insufficient limits.
• Coverage Comparison & Policy Checking Errors
  • AI-powered coverage comparison and policy checking tools are helpful but may not be perfect. It’s best if these tools are viewed as an additional review or a “double-check” for the agency rather than the sole method for checking the difference/similarities between two policies. If a client experiences an uncovered loss for something that was previously covered, and the AI tool missed it, the agent could still be liable.
• Inconsistent or Overreaching Messaging
  • Automation platforms may send emails or texts with prewritten language. If these communications suggest “full coverage” or imply a higher standard of care than what is provided, the agency may be held accountable for misrepresentations, even if they were automatically generated. Try to avoid “absolutes” like “always”, “never”, “all” and “will” and use softer language, like modal verbs, when possible “can”, “may”, “might”, or “typically”.
• Unsupervised AI Responses
  • If an AI chatbot or virtual assistant provides advice to clients or prospects, the agency could be liable for inaccurate or misleading information—even if it was “just a bot.”
• Hallucinations and Elevated Standards of Care
  • AI tools like ChatGPT become more integrated into insurance workflows or relied upon to write emails and content, agencies must understand both their potential and their limitations. ChatGPT’s can “hallucinate”— producing confident but incorrect information. These tools also tend to use polished, professional language that may unintentionally raise the perceived standard of care. If a client relies on this language and later suffers a loss, it could be used against the agency in an E&O claim.

Best Practices for Mitigating Tech-Based E&O Risks
To safely integrate technology into agency workflows:

• Review all tech-generated content: Never rely solely on automated outputs. Review quotes, proposals, coverage comparisons and any other content generated from AI to confirm accuracy and appropriateness.
• Avoid letting AI offer coverage opinions: AI tools should not answer questions relating to coverage, policy language or handle claims. These answers should come from a licensed agent.
• Clearly communicate: Make it clear to clients that technology tools assist, but do not replace, guidance from a licensed agent. Use disclaimers where appropriate.
• Train all staff: All staff should be trained on appropriate use of AI and technology. Ensure everyone understands that automation enhances workflows but doesn’t transfer responsibility.
• Document your oversight: Make sure to document when quotes and comparisons were reviewed and by whom in your agency management system.

Technology is a powerful tool—but not a shield from liability as it relates to E&O claims. Agencies that embrace automation must combine it with strong human oversight, sound documentation, and careful client communication. If an E&O claim does arise, it’s the agent’s judgement and actions – not the technology’s – that will be scrutinized and evaluated.