Virtual Assistants: E&O Concerns and Risk Management Tips

Insurance agencies are using virtual assistants more and more. These services can be advantageous, but there are coverage and risk management concerns, too. In this article we will discuss both traditional virtual assistants and artificial intelligence (AI) virtual assistants.

 WHAT IS VIRTUAL ASSISTANT?

Also referred to as a third-party resource, outside resource, or back-office support, a virtual assistant service is an organization an agency contracts with to perform services that typically slow agencies down, such as:

• Checking policies, comparing expiring to renewal forms and edition dates, and alerting agency personnel to changes
• Issuing Certificates of Insurances (COIs)
• Policy processing
• Data entry
• New Business support
• Sending auto responders

Having a virtual assistant allows agency personnel to focus more on selling, improving the customer experience, eliminating backlogs, and growing the agency. Depending on the scope and services the agency contracts for, the provider may assign several individuals to work on that business. These individuals may only perform services for your agency or may work with a number of agencies. This could be adjusted as contracted services change or the agency grows. Virtual assistants do not typically have direct contact with agency customers as agency personnel continue to be the public face of the agency.

COVERAGE CONCERNS

Does the Utica National Agents’ Errors & Omissions Policy cover virtual assistants? If the agency is named in a claim otherwise covered by the E&O policy, Utica National may provide defense to the agency and, if the agency is found liable, indemnification.*

The vendor for the virtual employee would not have coverage under the policy. Whether the coverage would extend to the employee of the vendor would depend on the contract in place with the vendor and how state laws define these employees. Typically, a claim will be brought against the agency rather than the vendor or a specific employee of the vendor.

*The facts of a claim determine the application of coverage and any exclusions. This response does not alter, modify, or change any of the terms, conditions, or exclusions of the Utica Mutual E&O Policy. Utica Mutual Insurance Company reserves all rights and does not waive any rights contained in the E&O Policy.

Does the E&O carrier have recourse against the virtual assistant if it was determined that their error resulted in the E&O claim? It’s possible. Make sure the virtual assistant maintains its own E&O coverage. However, the recourse and recovery would depend on the terms of the contract in place between the agency and the virtual assistant, including any limitation of liability.

RISK MANAGEMENT TIPS FOR TRADITIONAL VIRTUAL ASSISTANTS

If you are considering using virtual assistants, you should protect yourself by:

• Obtaining references and following up on them. Reputation is important.
• Having your attorneys review the contract.
• Requiring the virtual assistants to carry their own E&O and provide you with proof coverage is in place.
• Checking their work regularly to ensure they are meeting your expectations.
• Contacting your E&O carrier. Advise them of the vendor you are using, what services they are performing, and the staff equivalency for those services. Not all E&O policies are the same – so there may be conditions or exclusions for claims arising from wrongful acts caused by the virtual assistants.
  

ARTIFICIAL INTELLIGENCE (AI) VIRTUAL ASSISTANTS

What is an AI virtual assistant?
An AI virtual assistant is a software program that uses natural language processing, machine learning, and automation technology to perform tasks and provide support typically handled by human employees. This software can sometimes be embedded in hardware and integrated with multiple systems.

How does this differ from a traditional chat bot?
While a non-AI-driven chat bot will typically follow a script, an AI virtual assistant can understand context, learn from interactions, and offer personalized responses.

What are some of the ways that AI virtual assistants are being used?

• Customer Support – available 24/7 to handle customer queries about basic policy and billing information
• Lead generation
• Renewals – sending notifications and reminders, helping clients navigate the renewal process, identifying cross-selling opportunities, and suggesting them to clients
• Employee support – providing quick access to information such as guidelines and compliance information

RISK MANAGEMENT FOR AI VIRTUAL ASSISTANTS

• Privacy and Security – Given an AI assistant’s access to sensitive customer information, data breaches and privacy violations are a concern. Users should have robust encryption and multi-layered cybersecurity. It should be reviewed for adherence to ever-evolving privacy regulations regularly. Access to data should be restricted to only what is necessary for the tasks being undertaken.
• Data Quality – AI tools are only as good as the data they learn from. How accurate and complete is the data the tool is pulling from? Data clean-up may be necessary. Also keep in mind that models are trained on historical data and should be audited to avoid bias.
• Disclosure – Clients should be aware that they are interacting with an AI assistant and have the option to work with a human agent.
• Authority – Avoid allowing AI to make final decisions. AI assistants are ideal for support roles, but final decision-making should be done by a human after review of the AI output.
• Training – Staff should be trained on how the AI assistant operates, how to supervise it, and the potential flaws in data that can occur.
• Compliance – AI assistants should adhere to state and federal regulations. Keep informed of any AI-specific legislation that could impact your use of an AI assistant.

DON'T LET THIS HAPPEN TO YOU

An agency entered a service contract with a virtual assistant service. One of the tasks performed by the service on behalf of the insured agency involved the creation and distribution of Certificates of Insurance (COIs) for the agency’s customers. The claim against the agency involved an alleged error on a COI issued by the virtual assistant.

The COI indicated that an underlying Commercial General Liability (CGL) Policy was written with Products Completed Operations Coverage. This was not the case and the carrier denied coverage for an underlying claim since the policy was not written to afford coverage for this exposure. The client filed suit against the agency for issuing a defective COI. A subsequent third-party action was pursued on behalf of the agency against the virtual assistant service. The E&O and underlying claims were resolved for $165,000.

LESSON: When using a virtual assistant, be aware that their errors may result in an E&O claim against your agency.