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Society of Insura-Preneurs
AI Risk in Insurance Agencies
How to Protect Your Agency While You Use AI to Grow
Executive Summary
The Three Risks
Immediate Actions
Legal Landscape
Regulatory
Your 90-Day Plan
By Michael Jans — Society of Insura-Preneurs & AI Growth Academy
Co-Founder, Former CEO, Agency Revolution

As of January 2026, standardized AI exclusion language is available to every E&O carrier in the market. Agencies that cannot demonstrate human oversight and documented governance are the most exposed.
Why This Page Exists
A few months ago, a Mastermind member called me with a worried tone in his voice. He'd been hearing rumors about carriers, regulation, E&O - all sounding the danger alarm about AI.
"Michael, what the hell is actually going on?"
He wasn't the first to ask, so I went looking for answers. I moved past the vendor pitches and marketing decks to analyze legal scholarship, carrier policy filings, and regulatory developments.
YES…AI can create massive efficiency.
YES…AI can accelerate dominating growth.
And YES…agency principals must deploy it strategically, intelligently, and wisely.
With 30 years in the industry—including co-founding Agency Revolution and co-authoring The InsurTech Book—I have worked with thousands of agency principals. I built this page to provide a straight account of what is happening and how you can protect your agency.
You are not navigating this alone. The agencies that come through this well are the ones that get ahead of it.
The time is now.
Society of Insura-Preneurs
AI Risk in Insurance Agencies: How to Protect Your Agency
What E&O Carriers, Insurance Carriers, and Legal Experts Are Warning Agency Principals
By Michael Jans — Society of Insura-Preneurs & AI Growth Academy
Executive Summary
E&O Carriers
Actively repricing AI risk. Verisk (ISO) released standard AI exclusionary language effective Jan 2026.
Appointed Carriers
Broad AI exclusions emerging. Carriers monitoring agencies using AI tools to access portals autonomously.
Legal Experts
Abraham (UVA) & Sharkey (NYU): AI liability shifting from "silent" to specialized "affirmative" AI insurance.

Bottom Line: Without governance, documentation, and human oversight, your E&O policy may not cover AI-related claims when you need it most.
The Three Critical Risks
1
Coverage Is Disappearing
Your E&O policy was written before AI. It likely doesn't cover hallucinations, algorithmic bias, or AI-generated errors.
2
AI Errors Propagate Catastrophically
One human error = one client. One AI error = hundreds or thousands harmed simultaneously — "catastrophic exposure."
3
"The AI Did It" Won't Protect You
Regulators will demand: How did the AI decide? What oversight existed? Where's your documentation?
If any of these risks apply to your agency, an AI Clarity Session is the fastest way to get oriented.
What You Must Do Immediately
Next 30 Days
These four steps are non-negotiable. Don't wait for your renewal notice — act before coverage disappears.
Action 1: Contact Your E&O Carrier
Send written inquiry first — you want a paper trail. Then follow up by phone.
Ask exactly:
  • "Does my current policy cover AI-related claims?"
  • "Are AI exclusions being added at renewal?"
  • "What governance requirements would restore coverage?"
  • "Is affirmative AI coverage available?"
Action 2: Conduct an AI Inventory
You may discover AI in places you didn't expect:
CRM & AMS
Smart recommendations, predictive analytics, automated workflows
Client-Facing Tools
Chatbots, virtual assistants, AI writing assistance in email
Marketing Platforms
Automated send-time optimization, AI content suggestions, social scheduling

You can't manage risk you don't know exists. An inventory is the foundation of all governance.
Action 3: Human Review — No Exceptions
❌ No AI emails auto-sent
Agent must review and approve every client communication
❌ No AI recommendations unvalidated
Agent validates before any client-facing output
❌ No AI portal access unsupervised
Agent oversight required for all carrier system interactions
Write a one-paragraph policy. Distribute to all staff. Enforce it immediately.
The Perfect Storm: 2026
Why This Matters Now
1
Rapid AI Adoption
6% of agencies used AI in 2023. 57% by 2025 (Liberty Mutual) — few with governance.
2
Sweeping Exclusions
Berkley, Hamilton, Philadelphia Insurance — broad AI exclusions now in market. Verisk forms live Jan 1, 2026.
3
Legal Uncertainty
Courts just beginning AI tort law. Insurers can't price unknown risk — so they exclude it entirely.
What the Legal Scholars Say
Abraham (UVA) & Sharkey (NYU)
The "Black Box" Problem
AI's inscrutability makes traditional negligence standards hard to apply — but courts will still hold you liable.
Sharkey's Key Insight
If you were in the best position to catch an AI error through human oversight — and didn't — you may be liable even for your vendor's mistake.
The Cyber Parallel
Cyber insurance evolved from silent → explicit ($16.5B U.S. market). AI insurance will follow the same path.
The Exclusion Wave: 2025–2026
The direction is unambiguous. The time to act is before your renewal — not after.
What the Exclusions Actually Say
"This policy does not cover any claim based upon, arising out of, or attributable to the use, deployment, or development of artificial intelligence, AI-generated content, failure to detect AI-produced materials, inadequate AI governance, chatbot communications, or regulatory actions related to AI use."
W.R. Berkley — representative of the market trend. Plain English: If AI touched it in any way, there's no coverage.
Coverage Landscape by Line
E&O / Professional Liability
🔴 Most exposed. Berkley, Hamilton, others adding broad exclusions. Tech E&O highest risk.
Cyber Insurance
🟡 Holding firm for now. Traditional cyber events still covered — but watch for changes.
D&O Insurance
🟠 Increasingly includes AI exclusions for leadership decisions about AI deployment.
General Liability
🔴 Verisk's 2026 forms include AI exclusions for GL policies as well.
Professional liability limits ($5M–$20M range) growing at 14.9% CAGR due to AI-related severity (NAPA).

Don't know if your renewal is at risk? Let's find out.
The Risk Grid: AI Use Cases
Know Your Exposure
The Risk Multiplier
Every level assumes you have written policies, training, audit trails, and human oversight.
Without governance: Move every risk level up one category.

Never deploy: AI making coverage recommendations, responding to claims, or modifying coverage autonomously. These are lawsuit magnets.
The Critical Distinction
🔴 Operational AI — High Risk
Makes client-facing decisions · Communicates directly with clients · Accesses carrier systems autonomously · Modifies coverage data
🟢 Marketing/Positioning AI — Low Risk, High Value
Creates thought leadership (you review & publish) · Drafts client education (you approve) · Builds authority and expertise positioning
The Three Types of AI — Know Where You Stand
THE CRITICAL FRAMEWORK
Autonomous AI (High Risk)
  • Makes decisions without human approval
  • Communicates directly with clients
  • Accesses carrier systems
  • Modifies coverage or policy data
This is where E&O exposure lives. Don't deploy.
Productivity AI (Human-in-the-Loop)
  • Prepares work
  • Assists decisions
  • Speeds execution
  • Requires human approval before anything reaches a client or carrier
This is where most of the economic value of AI will be created inside agencies — without transferring responsibility.
Marketing & Positioning AI (Low Risk, High Leverage)
  • Drafts thought leadership
  • Creates educational content
  • Assists with marketing communication
  • Helps explain complex coverage clearly
This is where growth lives.

AI can prepare. Humans decide. Humans remain accountable. The moment AI acts without review — sending, recommending, binding, or modifying — you've crossed into high-risk territory.
AI as Your Content Engine
The Growth Opportunity
Email Newsletter
AI drafts · You refine & add voice · Clients hear from you consistently
Lead Magnets
Guides, checklists, coverage explainers · Generate inquiries around the clock
Video & Social
AI drafts scripts & post concepts · You record, refine, publish · Prospects find you before they need you
The principle: AI handles the scaffolding. You provide the credibility.

Most agency principals are using AI to worry about risk. The ones pulling ahead are using it to grow.
There's a version of your agency that shows up more consistently, communicates more clearly, and builds authority in your market — without adding headcount or hours.
An AI Clarity Session shows you what that looks like for your agency specifically.
Five Years From Now
Category 1: Reckless AI
E&O claims · Coverage exclusions · Regulatory violations · Damaged client relationships
Status: Struggling or out of business
Category 2: Avoided AI
No thought leadership · Outpaced by competitors · Seen as outdated · Losing market share
Status: Declining
Category 3: Strategic AI
Governance in place · More capacity per producer · Thought leadership · Growing through referrals
Status: Thriving

The difference isn't whether you use AI. It's HOW you use it.
Carrier Portals: The Hidden Landmine
Carriers Approve
  • Pre-built API connectors (AMS to carrier)
  • Automated data uploads via approved methods
  • Real-time quoting through approved platforms
Carriers Are Flagging
  • AI tools using agent credentials autonomously
  • Screen scraping / bot access
  • Autonomous binding decisions
  • Unauthorized multi-carrier AI comparisons

Violating portal terms can terminate your appointment — an existential risk.
The Binding Authority Gray Area
An AI tool accesses carrier portals, pulls quotes, compares options, selects "best" coverage, and submits a binding request. Who made the binding decision — the licensed agent or the AI?
State Insurance Law Violation
Licensed agent oversight required by law
Exceeded Binding Authority
Liability for both agency and carrier
E&O Exclusion Triggered
"AI-related decisions" excluded from coverage
The safe answer: A human agent must always make the final binding decision.
Regulatory Landscape
State & Federal Developments
States Leading
  • Colorado: AI Act (May 2024) — governance & bias testing required
  • New York: NYDFS AI guidance (2023)
  • California, Illinois: AI transparency laws (Jan 2026)
18 states currently debating AI legislation targeting algorithmic bias.
NAIC Model Law Coming
Draft anticipated 2026 · State adoption 2027–2028 · Includes human oversight mandates, vendor licensing, bias testing
What Regulators Will Ask
"Can you explain how the AI made this decision?"
"What human review was in place?"
"Did you test for discriminatory outcomes?"
"Can you produce documentation of all the above?"

Regulatory penalties for failure to supervise are NEVER covered by insurance. They come directly from agency revenue.
Your 90-Day Priorities
Agencies that build governance now — before it's required — will have competitive advantage at every renewal.
Advise Your Commercial Clients
E&O Opportunity + Obligation
Who's Most Exposed
  • Professional services (law, accounting, healthcare, financial)
  • Clients using AI in customer-facing operations
  • Clients using AI for hiring, credit, or pricing decisions
  • Clients whose vendors use AI on their behalf

If a client suffers an AI-related loss you never raised — that is an E&O exposure for your agency.
Strategic Actions: 6–12 Months
1
Affirmative AI Coverage
Evaluate standalone AI liability insurance. Early adopters with strong governance get better terms.
2
NIST Alignment
Govern = written policies. Map = AI inventory. Measure = audit logs. Manage = vendor oversight. You may already have it.
3
Vendor Accountability
Require $2M+ AI liability insurance, indemnification, SOC 2 Type II, audit rights, no training on your data.
4
Competitive Differentiation
Show clients, carriers, and E&O underwriters documented AI governance. Be the agency that's not a blind risk.
The Bottom Line: Control or Be Controlled
1
E&O coverage for AI is disappearing
2
Legal liability for AI is real and growing
3
Regulators are coming
4
Documentation is your only defense
AI is inevitable. The question isn't whether you'll use it — it's whether you'll control it before it controls your liability exposure.

Ready to control your AI exposure before your next renewal?
30-Year Insurance Industry Veteran
About Michael Jans
Michael Jans is one of the insurance industry's most recognized voices on agency growth, marketing, and the strategic adoption of emerging technology. Over a 30-year career, he has authored or co-authored more than 50 books, courses, and programs focused on the insurance trifecta: faster growth, higher income, and peak agency valuation.
Co-Author, The InsurTech Book
Published by John Wiley & Sons. One of the most widely read examinations of technology's transformation of the insurance industry.
Co-Founder & Former CEO, Agency Revolution
The insurance industry's pioneering agency marketing automation platform, successfully scaled and sold to FMG Suite. Ultimately responsible for the sale of tens of millions in tech to agency owners.
Industry Authority
Featured in Rough Notes, PC360, National Underwriter, Insurance Business America, and others. Addressed national boards of PIA and Big I, as well as users groups of Applied Systems, Vertafore, Hawksoft and more.
A Legacy of Leadership
Today, Michael leads the Society of Insura-Preneurs — a professional community for independent P&C agency owners serious about growth, technology adoption, and building agencies with lasting value. The Society's flagship program, the AI Growth Academy for Insura-Preneurs, helps agency principals deploy AI strategically, govern it responsibly, and use it as a lever for growth — without increasing liability exposure.

One Conversation. Total Clarity.
A free 15-minute AI Clarity Session gives you a clear picture of your agency's AI opportunity and exposure — and exactly what to do next. Sessions are limited and fill quickly.