PROF. LIABILITY
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AI, NECESSITY, OPPORTUNITY AND E & O RISK written by Jim Redeker, Swiss Re
Plato said that“ necessity is the mother of invention.” Today, necessity is helping drive artificial intelligence( AI) adoption across the insurance industry.
Machine learning and artificial intelligence( AI) have been part of the conversation since the 1950s, inspiring generations of science fiction writers and filmmakers along the way. Today, however, AI is no longer a futuristic idea. It has moved into the workplace because the workplace needs it. In the insurance industry, that need has become especially clear as agencies face an aging workforce, persistent staffing challenges and a continuing struggle to attract and retain younger professionals.
Before COVID-19, the most common industry question was,“ How do we get millennials interested in insurance? And how do we keep them here?”
Today, the questions have changed. Agency owners want to know what AI products are available, how they can be used and whether AI-related mistakes will be covered under their errors & omissions policy. In short, the industry appears to have decided that AI may be part of the answer to its workforce shortage.
AI can also help solve another long-standing problem in our industry: E & O claims.
Whenever he was asked what was new in E & O, Richard Lund, former Swiss Re risk manager, often replied,“ New people making the same old mistakes.”
And there’ s proof of just how true that statement is. A 1972 risk management program,“ What You Always Wanted to Know About Your E & O Exposure( But Were Afraid to Ask)” listed the top four alleged causes of loss. Remarkably, they are the same top four causes we continue to see today: Failure to renew existing coverage; failure to write new coverage as requested; failure to provide“ adequate coverage”; and failure to transmit information to the company, which failure resulted in a denial of coverage.
When we look closely at those causes of loss, a pattern emerges: many stem from human error, inadequate documentation, or both. Human error is a result of lack of knowledge, inexperience, distraction or forgetfulness. Meanwhile, documentation problems occur because someone forgot to document a conversation, did not have time to do it properly, or failed to capture the right information in the client file. Used carefully, AI offers agencies practical tools to address each of these issues.
AI can help identify inconsistencies, prompt staff to complete missing steps, summarize client
24 KANSAS INSURANCE AGENT & BROKER