New Proposed Legislation in Florida Regarding AI Use in Claims Handling
The landscape of insurance claims processing is on the brink of significant change with the introduction of new legislation in Florida, specifically HB 527 and its companion bill SB 202. These proposed laws aim to impose strict regulations on the use of artificial intelligence (AI), algorithms, and machine learning systems in the claims handling process.
Mandatory Human Reviews
One of the cornerstone provisions of these bills is the requirement for mandatory human reviews of claim denials. The legislation explicitly stipulates that information derived from AI systems cannot serve as the sole basis for adjusting or denying claims, either in full or in part. This move addresses concerns over the potential for AI to make erroneous or biased decisions without adequate human oversight.
Detailed Claims Handling Manuals
Insurers will be required to provide a comprehensive description of how AI and other automated systems will be used in their claims handling procedures. This information must be included in their claims handling manual, ensuring transparency and compliance with the law.
Qualifications for Reviewers
The legislation mandates that individuals who review claim denials must be qualified human professionals. Specifically, these are individuals authorized to adjust or deny claims under the Florida Insurance Code. Their responsibilities include:
- Independently analyzing the facts of the claim and the terms of the insurance policy, free from AI influence.
- Reviewing the accuracy of any output generated by AI or algorithmic systems.
- Determining whether the claim is payable under the terms of the insurance policy.
Legislative Intent
The sponsors of these bills argue that they address a pressing challenge in the insurance market, offering a clear and reasonable safeguard against decisions made solely by algorithms. This initiative reflects a growing recognition of the need for human oversight in an era increasingly dominated by technology.
Regulatory Context
In 2023, the National Association of Insurance Commissioners (NAIC) approved a model bulletin regarding AI’s use within the insurance sector. This bulletin emphasizes the necessity for processes and controls that guard against inaccuracies, discriminatory biases, and data vulnerabilities inherent in AI systems. It serves as a reminder that insurers must also comply with established regulatory frameworks, such as the Unfair Trade Practices Model Act, which governs unfair competition and deceptive practices.
Potential Challenges
Despite its intentions, this proposed legislation may face challenges at the federal level. Recently, an executive order was signed by the President, which blocks states from enforcing individual laws regulating artificial intelligence. The outcome of this legislative initiative remains to be seen as various stakeholders navigate the intersection of technology and regulation.
