Archive for category: Insurance

The insurance industry is one of the oldest and most traditional business sectors. But in recent years, artificial intelligence has become a driving force behind its transformation. The rise of ChatGPT, a large language model developed by OpenAI, has revolutionized the way insurance companies interact with their customers and make decisions about underwriting.

One of the biggest benefits of ChatGPT in the insurance industry is the improved customer service experience. ChatGPT-powered chatbots provide quick, accurate and personalized responses to customer queries 24/7, reducing the need for human intervention. This not only improves customer satisfaction but also reduces costs for insurance companies.

Another way ChatGPT is changing the insurance industry is through underwriting. AI-powered algorithms can analyze vast amounts of data, including medical records and financial history, to make informed underwriting decisions. This results in more accurate risk assessments and improved pricing, leading to more profitable business for insurance companies.

Additionally, ChatGPT and AI can also help insurance companies detect and prevent fraud. With the ability to analyze large amounts of data in real-time, AI can identify patterns and anomalies that may indicate fraudulent behavior, providing a new level of protection for both the company and its customers.

Despite the benefits, the insurance industry still faces challenges when it comes to adopting AI and ChatGPT. One of the biggest hurdles is the lack of understanding of the technology and how it can be used effectively. Additionally, there are concerns about data privacy and the potential loss of jobs due to automation.

In conclusion, ChatGPT and AI have the potential to revolutionize the insurance industry, providing improved customer service, more accurate underwriting, and enhanced fraud protection. The insurance industry must embrace this technology, overcome the challenges, and reap the benefits that it has to offer.

Now a pause for full disclosure. This entire article (up to this point) and the title were composed by Chat GPT in response to the simple command:“Write a magazine article about impact of Chat GPT and artificial intelligence on the insurance industry.” The promise of artificial intelligence comes with dystopian downsides.  But there are more clear and present risks. For instance, if you load confidential information onto Chat GPT, that information could show up in someone’s future search, impacting the security of your customer’s private information.

 

Another risk is the use of chatbots to handle online customer service.  Though that trend is building like a tidal wave, it is an open secret that a significant percentage of answers spit out by Chat GPT are simply incorrect.  These include errors of fact, math and logic.  So be careful when considering outsourcing customer service to a chatbot.  A related risk is “puffing”, or making legally actionable boasts or promises.  This has been the topic of prior articles in Dec Page Quarterly, so you likely are apprised of the importance of choosing your words carefully. But don’t trust artificial intelligence to do the same.

 

In conclusion, the insurance industry, like all of society, is in the salad days of the democratization and widespread availability of artificial intelligence. There is great promise and great risk.  Embracing it to enhance customer service in your agency is something you should consider. But know the risks. Remember the words of HAL 9000 in Stanley Kubrick’s 2001: A Space Odyssey: “I’m sorry Dave. I’m afraid I can’t do that.”

 

This article is not intended to provide “legal advice” on the issues discussed in it and does not create an attorney-client relationship. It is only for informational purposes. Please contact Slotkin Law Firm or another attorney who is knowledgeable in this area of the law about your specific situation before taking any action.

A few weeks ago I had lunch with an old friend from law school. We sat at the same table where we’d poured over our law books in the 90s. We ate the same, sizzling fajitas we’d enjoyed while quizzing each other during final exam week. Now, instead of comparing notes and lecture summaries, we talked about our families, careers, and recent developments in the law. Our conversation quieted as we began taking nostalgic bites of fajita, but not even our favorite cuisine could distract us from an argument rising at a nearby table.

Two teenagers whisper-shouted at one another, engaged in a not-so-private debate about the lengthy bill that had just been brought to their table. It seemed that one of the boys couldn’t pay, and the other was not eager to cover for his friend. Eventually, the teenager who forgot his wallet abruptly stood from the table, anxiously rubbed at the back of his neck, and shrugged. “Sorry man, but I’ve really got to run. Can’t you pay just this once?” He didn’t give his friend the chance to argue before scurrying out of the restaurant. The remaining teenager was left to pay the whole bill.

I watched from the corner of my eye as the sullen boy took responsibility for his friend’s misconduct. Long after both teenagers left the restaurant, however, I found myself pondering the situation. Of course, I like to think that most people would choose to pay the bill for their friend, just like the boy abandoned at the restaurant. But then I began wondering, “What if the person skipping out on the bill was not a friend, but a total stranger, sitting alone at an entirely different table? What if they scurried out of the restaurant after gorging on the most expensive combo-meal on the menu with no intention of paying for it?”

In this situation, I doubt anyone would feel obligated to pay for this stranger. And yet, imagine the waiter dropped the dasher’s unpaid check on your table, explaining, “Sorry, you’ll need to pay this since you’re sitting the closest nearby.” Most of us would throw our hands up and exclaim, “That’s not fair! This bill is not my responsibility!” Although it is a comfort to know that restaurants and businesses can’t really force an unrelated party to pay another patron’s check, there was a time in Georgia when a single named defendant in a lawsuit could be forced to foot the bill for the damages caused by another, unnamed party’s wrongdoing in addition to its own.

Since the Tort Reform Act of 2005, Georgia’s apportionment statute has allowed damages to be apportioned according to each defendant’s share of fault.[1] Furthermore, the law protected defendants from being forced to pay additional damages attributed to another party not named in the lawsuit. In other words, the law safeguarded defendants from having to pay a non-party’s share of damages. If a stranger at the restaurant dashed out before paying, the waiter could not make a hapless patron pick up the stranger’s check simply because he also had a check to pay and was seated nearby.

For over fifteen years, Georgia law extended this protection for defendants named in lawsuits. However, in August of 2021, the Georgia Supreme court decided a case that changed the operation of this rule and earning infamy in the insurance world—Alston & Bird v. Hatcher Management.[2]

The Hatcher court focused on a small yet critical wording difference between subsection (b) and the other provisions in Georgia’s apportionment statue. The court pointed out that subsection (b) allowed for apportionment between defendants only “Where an action is brought against more than one person.” When compared to another subsection of the same statute, which read, “Where an action is brought against one or more persons,” the difference is evident. As such, the court decided that the reprieve of apportionment does not extend to cases with a single named defendant—that is, the single named defendant would be held liable for all damages, even if most of the damages were caused by another, unnamed party.

As the restaurant bill illustration makes clear, the court in Hatcher Management said apportionment was only available when two or more defendants were present—but not when there was only one. To have the dasher’s check paid, the waiter could simply select a table with a lone diner, avoiding tables with two or more diners. While some strategic moves by plaintiffs could be countered, the unfairness and inconsistency remained. That is, until the Legislature passed House Bill 961 in 2021.

House Bill 961, the top legislative priority for IIAG in 2021, responds to the injustice discussed above by replacing four words and adding two in the apportionment statute. Whereas, Hatcher permitted apportionment only in lawsuits brought against “more than one person,” the Legislature adjusted the language to read “one or more persons”. Moreover, where the trial judge or jury was previously commanded to apportion damages among the “persons” who are liable, the new law reads “person or persons.” This changes are small but punch above their weight, giving your clients (especially those with substantial assets) added peace of mind that they won’t be left holding the bag for someone else’s conduct. Apportionment now applies even when your client is the only defendant. Your client can now rest assured they will not be forced to shoulder the bill for someone who dines and dashes.

 

This article is not intended to provide “legal advice” on the issues discussed in it and does not create an attorney-client relationship. It is only for informational purposes. Please contact Slotkin Law Firm or another attorney who is knowledgeable in this area of the law about your specific situation before taking any action.

[1] Ga. Code Ann. 51-12-33.

[2] Alston & Bird, LLP v. Hatcher Mgmt. Holdings, LLC., 312 Ga. 350 (2021).

We know words have consequences. Knowing where to draw the line between sales and advertising on the one hand, and actionable misrepresentations on the other, can be the difference between a growing business and a bankrupt one. If you cross that line you might be euphemistically writing checks your business cannot cash.[1] We often think of representations and warranties as legally binding only if they are part of a written contract.[2] However, contractual obligations can arise from conversations with a potential client, your company’s website, advertisements, or social media.[3] What you say can create representations and warranties the same as what you put in writing.[4] What exactly are representations and warranties and how do you protect yourself and your business?

“Representations” broadly include words or actions that assert a promise which can be relied upon.[5] For example, if you say, “We’ll make sure you have all the proper coverage”, you have represented that your company will in fact make certain the customer has all necessary coverage, and may have taken on the responsibility in the event of a non-covered loss. “Warranties” are words or actions that covey promise to indemnify a party if a specific assertion proves false.[6] For example, if you say, “We know how to identify hidden exposures”, you arguably have warranted that the customer will be covered against all insurable risks.

Implied representations and warranties are harder to spot and may situation specific.  For example, a document called “Home and Flood Policy Application” may create the impression the client is buying flood insurance.[7] This could create an implied warranty that the policy covers damage from flooding. Even unintentionally misleading statements can expose your company to liability.[8]

Small adjustments in language can have significant legal implications.[9] Georgia law places higher duty of care on professionals in special positions of trust and reliance. Courts hold insurance professionals, including your staff, to this higher duty of care.[10] Be careful about holding yourself out to be an “expert”.  This can create a higher duty of care and make it easier for a client to win a lawsuit.[11] For these reasons, it is essential to be thoughtful, knowledgeable and savvy about the language you use.

How to safe guard yourself and your business:

There are two principles to keep in mind that can help you avoid the pitfalls and liability of errant representations and warranties: 1) be accurate, and 2) be consistent. Representations and warranties do not pose legal liability if you make good on them. This is why it is so important to accurately and clearly state what is you offer and do not offer.

Stay away from superlative embellishments like “best coverage”, “lowest cost”, “exceptional efforts”, or “expert advice”. Stay away from absolutes like “always”, “never”, “all”, or “every”. Such language is more likely to be viewed as creating a binding representation or warranty. Be cautious making statements about the scope of coverage, level of service or expertise, duty of care, payment of claims, or any financially significant detail. All of your contracts should contain “merger clauses”, which state that verbal representations do not change or enlarge the scope of written contractual obligations.  You can be sure the policies you sell contain such language, and your contracts with your clients should as well.[12]

Train your staff thoroughly. Make sure they understand the importance of choosing their words carefully. Good training and polices are exceptionally important because your business can be held responsible for your staff’s words and actions.[13] If you blog, don’t outsource content creation without reading it carefully before it is posted.

Have an attorney draft or review your contracts, polices, contracts, website, and advertising language. This may seem burdensome or unnecessary, but it will save your company a headaches and money down the road.

 

This article is not intended to provide “legal advice” on the issues discussed in it and does not create an attorney-client relationship. It is only for informational purposes. Please contact Slotkin Law Firm or another attorney who is knowledgeable in this area of the law about your specific situation before taking any action.

 

[1] O.C.G.A. § 33-6-3; O.C.G.A. § 33-6-4; O.C.G.A. § 51-6-2(b).

[2] Ga. Comp. R. & Regs. 120-2-47-.08; O.C.G.A. § 51-6-2(b); O.C.G.A. § 33-24-7.

[3] Ga. Comp. R. & Regs. 120-2-47-.10; O.C.G.A. § 33-6-3.

[4] Traina Enterp. v. Cord & Wilburn, Inc., 289 Ga. App. 833 (2008); Heard v. Sexton, 243 Ga. App. 462 (2000).

[5] Thomson Reuters Practical Law Glossary Item 8-382-3760

[6] Home Ins. Co. v. N. River Ins. Co., 192 Ga. App. 551, 553 (1989); Prudential Ins. Co. v. Perry, 121 Ga. App. 618, 622 (1970).

[7]  Greene v. Lilburn Ins. Agency, 191 Ga.App. 829, 830 (1989); First Fin. Sav. & Loan Ass’n v. Title Ins. Co. of Minnesota, 557 F. Supp. 654, 661 (N.D. Ga. 1982); Morton v. W. T. Tharpe & Co., 41 Ga. App. 788 (1930).

[8] Id.; O.C.G.A. § 33-6-4; O.C.G.A. § 51-6-2; Ga. Comp. R. & Regs. 120-2-47-.08.

[9] Atlanta Women’s Club v. Washburne, 207 Ga.App. 3, 4 (1992).

[10] Jim Anderson & Co. v. ParTraining Corp., 216 Ga. App. 344, 345 (1995).

[11] Bush v. AgSouth Farm Credit, ACA, 346 Ga. App. 620, (2018); MacIntyre & Edwards, Inc. v. Rich, 267 Ga. App. 78, 80 (2004).

[12] Worsham v. Provident Companies, Inc., 249 F. Supp. 2d 1325, 1332 (N.D. Ga. 2002).

[13] Home Materials, Inc. v. Auto Owners Ins. Co., 250 Ga. 599, 300 (1983); Auto-Owners Ins. Co. v. Anderson, 252 Ga. App. 361, 363 (2001).

 

Your business partner calls you at St. Simons Island. “Do you want the bad news or the worse news?” “Um, you know I’m on vacation, right?  This couldn’t wait until Monday.” “Definitely not,” says your partner.  “Our best producer gave notice this morning and cleaned out her desk. And that’s only the bad news. I’ve gotten calls from three clients this afternoon saying they’re moving their business to the producer’s new agency. What are we going to do?”

An employment restrictive covenant limits an employee from engaging in a particular activity. The most common types are non-competition agreements and non-solicitation agreements. Before 2009, many employment restrictive covenant agreements were illegal under the Georgia Constitution.[i] Following a constitutional amendment to permit these types of agreements,[ii] the legislature passed the Restrictive Covenant Act, (the “Act”) with an eye toward making Georgia a more business-friendly state. The Act is designed to permit “reasonable restrictive covenants contained in employment and commercial contracts [that] serve the legitimate purpose of protecting legitimate business interests and creat[e] an environment that is favorable to attracting commercial enterprises to Georgia.”[iii] Two things to keep in mind: (1) any restrictive covenant entered into before May 11, 2011, is not governed by the Act; and (2) in July the Biden administration issued a wide-ranging Executive Order that, among other things, asks the Federal Trade Commission to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”[iv] That Executive Order does not change Georgia law, but it suggests change may be coming. To quote the Robert Frost poem from which the title to this Article comes, “something there is that doesn’t love a wall.”[v]

1. Non-Competition.

Generally, a non-competition agreement between employer and employee imposes post-employment restrictions on the employee to protect the company’s trade secrets, proprietary information, intellectual property, and other valuable assets. However, not every employee may be subjected to a non-competition agreement. Georgia limits the types of employees that can be subject to a post-employment non-competition agreement to sales employees, management employees, key employees or professionals, and employees who regularly solicit customers for the company.[vi]

Under Georgia law, a valid non-competition agreement is limited to restrictions that “are reasonable in time, geographic area, and scope of prohibited activities.”[vii] First, the non-competition agreement must be reasonable in time. Georgia presumes reasonable any non-competition agreement with a duration of less than two years post-employment.[viii] This means that your agency should not attempt to prevent an employee from competing for more than two years. Second, the agreement must be reasonable in geographic scope.[ix] Georgia courts strike down non-competition agreements lacking a geographic restriction.[x] That restriction should be clearly written and narrowly tailored to protect your legitimate business interests without unduly limiting the employee’s right to make a living. For example, “the territory where the employee actively works at the time of termination” or similar language shall be considered sufficient as a description of geographic areas if the person or entity bound by the restraint can reasonably determine the maximum reasonable scope of the restraint at the time of termination”[xi] Finally, the agreement must be clear and reasonable in defining the scope of prohibited activities, such as “of the type conducted, authorized, offered, or provided within two years prior to termination’ or similar language containing the same or a lesser time period.”[xii] If you have questions about implementing a non-competition clause in you employee contracts, please contact an attorney of your choosing.

2. Non-Solicitation.

A non-solicitation agreement, one that prohibits a former employee from soliciting either customers or employees, must clearly define whom the employee is prohibited from contacting.[xiii] It also needs to be tied to a legitimate business interest you are seeking to protect.[xiv] However, unlike non-competition agreements, non-solicitation agreements do not require a geographic limitation.[xv] A customer focused non-solicitation agreement should be limited to customers the employee actually contacted while working for your agency. [xvi] Mere passive acceptance of business is unlikely to be considered solicitation.[xvii] The former employee must take an action to violate a non-solicitation clause.

3. Enforcing a restrictive covenants agreement

If you suspect a former employee violated their non-competition or non-solicitation agreement, there are several steps you can take. Collect all documents and information related to the suspected violation. Investigate the activity of the former employee or independent contractor. Before speaking to clients, employees or others who may have first-hand knowledge of a violation, speak with an attorney! This is critical to avoid you being on the receiving end of claims for defamation or tortious interference with contractual or business relations. With the assistance of your attorney, consider whether to send a cease and desist letter notifying the former employee of the violation, whether to contact the new employer and, if so, what you can say to the new employer. Finally, consider taking formal legal action such as mediation, arbitration, or litigation.

4. Hiring Employees Subject to a Restrictive Covenant Agreement.

There are several types of claims that may be brought against a company that is allegedly complicit in an employee’s violating their restrictive covenant agreement with a former employer. These include tortious interference, aiding and abetting a breach of fiduciary duty or duty of loyalty, misappropriating trade secrets, and participating in unfair competition. Before you hire an employee, the following steps will reduce your risk. First, determine if the employee is subject to any restrictive covenant. Second, determine if the covenant is likely to be enforceable. Consider seeking a legal opinion about the enforceability of the restrictive covenant. Third, determine whether the duties the employee will perform for your company might violate the restrictive covenant. Fourth, remind the employee that she is bound by a restrictive covenant with the former employer and that she cannot use the former employer’s confidential information such as customer lists, renewal dates and rates. If applicable, remind the employee that she cannot recruit other employees of their former employer. Document this conversation. Finally, if you receive a letter from a lawyer alleging that an employee working with your company has violated a restrictive covenant agreement with a former employer, contact legal counsel as soon as possible.

This article is not intended to provide “legal advice” on the issues discussed in it and does not create an attorney-client relationship. It is only for informational purposes. Please contact Slotkin Law Firm or another attorney who is knowledgeable in this area of the law about your specific situation before taking any action.

 

[i] Ga. Const. art. III, §6, para. V(c) (1983); see also Jackson & Coker, Inc. v. Hart, 261 Ga. 371 (1991).

[ii] Georgia Employment Contract Enforcement, Amendment 1 (2010)(amending the Georgia constitution to authorizing legislation to uphold reasonable competitive agreements).

[iii] O.C.G.A. § 13-8-50.

[iv] Executive Order on Promoting Competition in the American Economy.

[v] Robert Frost, Mending Wall, in North of Boston 11-13 (11th ed. 1924).

[vi] O.C.G.A. § 13-8-53(a); see also O.C.G.A. § 13-8-51.

[vii] O.C.G.A. § 13-8-53(a); see also O.C.G.A. § 13-8-56; O.C.G.A. § 13-8-57.

[viii] O.C.G.A. § 13-8-57. (However, when the non-competition clause is part of the sale of a business, the courts will presume that any duration less than five years is reasonable).

[ix] O.C.G.A. § 13-8-56.

[x] Carpetcare Multiservices, LLC v. Carle, 347 Ga. App. 497, 500 (2018).

[xi] O.C.G.A. § 13-8-53(c)(2).

[xii] O.C.G.A. § 13-8-53(c)(2).

[xiii] For further information about how the Act defines contact see O.C.G.A. § 13-8-51(10).

[xiv] “Legitimate business interest” is defined in O.C.G.A. § 13-8-51(9).

[xv] O.C.G.A. § 13-8-53(b).

[xvi] PointeNorth Ins. Grp. v. Zander, Civil Action No. 1:11-CV-3262-RWS (N.D. Ga. 2011).

[xvii] Waldeck v. Curtis 1000, Inc., 261 Ga. App. 590, 592 (2003).