Is an insurance broker allowed to use AI?

GDPR, IDD and liability explained in simple terms

Are insurance brokers allowed to use artificial intelligence, or do they risk GDPR violations and liability risks?

Yes, insurance brokers are allowed to use artificial intelligence.

The use of AI is fundamentally permitted under GDPR, IDD and the EU AI Act, provided certain framework conditions are met. AI may assist brokers with preparation, structuring and analysis. However, the responsibility for advice and decisions always remains with the broker.

Many brokers in Germany ask themselves this question because the pressure of daily work is increasing while regulatory requirements are becoming ever more complex. AI promises noticeable relief in the brokerage, but uncertainty remains: what is allowed, what is risky and where are the legal boundaries?

This article provides a clear, practical assessment for insurance brokers. Explained in simple terms, without legalese, and focusing on what is truly relevant in a broker's day-to-day work.

AI in the brokerage is fundamentally permitted

Neither GDPR, IDD, nor the new EU AI Act prohibit the use of artificial intelligence in the brokerage. On the contrary, the legislature assumes that digital tools, including AI, will be used.

The decisive factor is not whether AI is used, but how. AI may support, prepare, structure and analyse. However, responsibility for advice and decisions must remain with the broker.

A typical example from daily practice: when an AI pre-sorts emails, checks documents or prepares draft replies, this is legally unproblematic. The final check and approval are still carried out by the broker.

GDPR: AI may process data, but only in a controlled way

GDPR is the most important framework for using AI in a brokerage. It does not ban AI, but sets clear requirements for handling personal data.

For brokers, this specifically means:

• Only data that is necessary for the respective purpose may be processed

• Client data must not be used for third-party or unclear purposes

• The broker must know where data is processed and who has access to it

A common misconception is that using AI in itself constitutes a GDPR violation. This is incorrect. What is decisive is the lack of control, transparency and documentation.

No fully automated decisions in advice

A central point of both GDPR and IDD is clear:

Advisory decisions must not be fully automated.

This applies, among other things, to:

• Acceptance or rejection of risks without a broker's decision

• Product recommendations without human review

• Decisions with financial or legal implications for the client

In practice, this is rarely an issue for brokers. Most AI applications in the brokerage sector are deliberately designed as assistance systems. They make suggestions, identify correlations or prepare information. The decision is still made by the broker.

As long as this principle is respected, using the system is legally sound.

Liability stays with the broker, but AI reduces risks

Regardless of whether software, a pool or an external service provider is used, the broker remains responsible. Just as with comparison calculators, calculation tools or text templates. 

However, this is not a disadvantage. Used correctly, AI can even reduce liability risks. It works in a structured way, does not forget deadlines, detects discrepancies and ensures traceable processes. Errors that easily occur in stressful daily routines are thus detected earlier. It remains important for the broker to check results and understand how they were arrived at.

EU AI Act: usually not high-risk for brokers

The new EU AI Act follows a risk-based approach. The higher the risk of an application, the stricter the requirements.

Typical AI applications in brokerages such as text assistance, document analysis, email sorting or internal analyses do not generally fall under high-risk AI. 

Nonetheless, initial obligations apply:

• clear internal rules on what AI is used for and what it is not

• conscious handling of client data, just as with any other software

• the broker remains professionally responsible and checks results

Afori recommends exactly what many brokers are already implementing: defining which tools are used, which data may be entered, and who bears responsibility.

Integrating AI properly into compliance

For brokers, this does not mean major restructuring, but clean structure:

• AI is part of existing data protection and IT processes

• its use is documented

• employees know what is allowed and what is not

• results are checked, not blindly adopted

Those who proceed this way are on safe legal ground.

Caution with public AI tools such as ChatGPT

One point is often underestimated in daily operations. Many brokers first test AI using freely available tools like ChatGPT or similar providers. Here lies a clear GDPR risk. Anyone who enters sensitive client data, policy numbers, health details, claim information or contract details into public AI services is clearly violating the GDPR. In these cases, it is neither possible to track where the data is processed, nor for what purpose it is stored or reused.

This is not a grey area, but a clearly problematic legal issue.

How brokers can recognise a legally compliant AI solution

A professional AI solution for brokers must:

• work in compliance with GDPR

• process data within the EU

• offer Data Processing Agreements (DPAs)

• meet clear information security standards

• ensure client data is not shared with operators of Large Language Models (e.g. ChatGPT/OpenAI)

Only under these conditions does AI reduce risks instead of creating new ones.

Putting it in context: the example of Afori

Afori, an AI platform designed specifically for insurance brokers, was developed precisely for this professional use. The platform is designed to be GDPR-compliant, is operated within the EU and is certified according to ISO 27001:2022. The AI assistants work transparently, in a controlled manner and without any unauthorised reuse of client data. In addition, specific insurance knowledge is integrated into the AI, so that content can be professionally and correctly categorised.

This makes Afori an example of an AI solution that relieves brokers without generating legal or data protection risks.

Conclusion

Insurance brokers are allowed to use AI.

GDPR, IDD and the EU AI Act set guide rails, not bans.

Anyone who uses AI as an assistant, protects client data, checks decisions and documents processes acts in a legally secure manner. The actual risk does not lie in the AI itself, but in uncontrolled use without clear rules.

Used correctly, AI does not become a threat, but a tool that increases quality, efficiency and security in the daily work of brokers.