Insurance professional

Where the tool goes wrong, and why it is easy to miss

Clause 4.2 excludes only flooding by river water or rainwater entering from outside; the draft restates it as “damage caused by water” and applies it to a pipe that burst inside the building. It is a documented pattern with exclusions: models link the loss to the exclusion through a shared word, here “water”, not through the cause the wording describes. It slips through because the clause number is real, so the quick check “does clause 4.2 exist?” passes, and the restatement reads like a fair summary. The cited exclusion does not support the refusal, and the letter gives the policyholder wrong information about their contract; Article 58, point 2 of Law no. 52/2014 "On insurance and reinsurance activity" requires insurance companies not to give information that misinforms the consumer.

The check that catches it

1. Open the signed policy conditions, in the version that covered the date of loss, and put the exact wording of the clause the draft cites next to the draft.
2. Split the exclusion into its elements (here: flooding, river water or rainwater, entry from outside) and mark for each whether the loss adjuster's report and the damage photos confirm it.
3. In the letter, replace any restatement of the clause with its exact text, in quotation marks, so the policyholder reads the contract's own words.
4. If even one element is not confirmed, do not send the refusal: return the file for a coverage assessment under the policy's other conditions.

Where the failure pattern is documented: Academic study of LLMs and insurance policy wordings (arXiv, Stanford CodeX and others, February 2025); EIOPA supervisory report on generative AI in insurance (February 2026); NAIC model bulletin (December 2023).Sources: Stanford CodeX and others, 2025; EIOPA, 2026; NAIC, 2023.The case above is ours, written for work in Albania; the laws it names were checked against the official text.