Florida Bill Requires Human Oversight for AI in Insurance Claims After Denial Concerns

Florida House panel approves proposal requiring humans to make final decisions on claims after concerns of industry's use of AI

In an issue stemming from the use of artificial intelligence in the insurance industry, a House panel Tuesday approved a proposal that would require humans to make ultimate decisions about denying claims or reducing claim payments. The House Insurance & Banking Subcommittee unanimously approved the bill (HB 527) amid opposition from insurance-industry groups -- but support from groups that represent hospitals and doctors. "No Floridian should ever have a claim denied based solely on an automated output," bill sponsor Hillary Cassel, R-Dania Beach, said. "HB 527 establishes a clear and reasonable safeguard." The bill makes clear that insurers could use artificial intelligence and algorithms in processing claims and making recommendations about approvals and denials. But it says a "carrier's decision to deny a claim or any portion of a claim or a payment claim reduction must be made by a qualified human professional." Also, it would take steps such as requiring that insurers using artificial intelligence or algorithms in claims handling provide details in what are known as "manuals" that can be reviewed by insurance regulators. Tuesday's vote came amid what House Speaker Daniel Perez, R- Miami, has declared "Artificial Intelligence Week," with House panels looking at a variety of issues involving the fast-developing technology. President Donald Trump on Monday said he plans to issue an executive order that would prevent states from regulating artificial intelligence. But Cassel, an attorney, said such an executive order would not block her proposal because a decades-old federal law has given states authority over insurance regulation. State Insurance Commissioner Michael Yaworsky last month told a Senate committee that he wants changes to make sure regulators can properly oversee AI use -- though he did not go as far as Cassel's proposal. Yaworsky said he wants to address issues such as disclosure when artificial intelligence is being used, auditing and understanding that companies have a "human in the loop that knows what that system is doing, has expertise on that." "This is a policy decision for the Legislature," Yaworsky told the Senate Banking and Insurance Committee. "We don't view it as a necessary benefit to eliminate the use of AI. That's a legislative decision to make. But we do want to provide a path where, if it is being used, it is being used responsibly, known to the regulator." Cassel's bill drew opposition Tuesday from representatives of the Florida Insurance Council, the American Property Casualty Insurance Association and the Personal Insurance Federation of Florida, which represents large national auto and property insurers. They expressed concerns, for example, that the bill could make it harder to quickly resolve claims and said the state's insurance laws already address issues about fairly handling claims. But the bill got support from groups such as the Florida Hospital Association and the Florida Medical Association, whose members submit insurance claims.

Florida Bill Mandates Human Oversight for AI in Insurance Claim Denials

Investigations have found that major insurers are using algorithms to generate denial letters in bulk. A Florida House panel has unanimously approved a bill that would require a human to make the final decision on whether an insurance claim is denied or reduced. The proposal aims to create a safeguard against the increasing use of artificial intelligence in the insurance industry, ensuring that automated systems alone cannot reject claims. "No Floridian should ever have a claim denied based solely on an automated output," said the bill's sponsor, Representative Hillary Cassel. The Republican says the proposed legislation "establishes a clear and reasonable safeguard." The House Insurance & Banking Subcommittee passed the measure on Tuesday, gathering support from hospital and doctor associations while facing opposition from insurance industry groups. The move comes during what House Speaker Daniel Perez has declared "Artificial Intelligence Week," a period dedicated to examining the impact of the rapidly advancing technology. The bill clarifies that while insurers can use AI and algorithms to process claims and recommend approvals or denials, the ultimate authority must rest with a person. It states that "a carrier's decision to deny a claim or any portion of a claim or a payment claim reduction must be made by a qualified human professional." The push for human oversight comes amid growing concerns over high claim denial rates. In 2023, data from KFF showed that 20 percent of all claims under Affordable Care Act marketplace plans were denied. Similarly, audits have revealed that insurers frequently deny or delay millions of care requests within Medicare Advantage, which covers more than 30 million Americans. Despite this, fewer than 1 percent of ACA plan denials are appealed. Florida residents have also complained about high denial rates on claims for damage caused by hurricanes and other major storms. In recent years, AI has amplified this issue. Investigations have found major insurers using algorithms to generate denial letters in bulk, sometimes almost instantaneously and against the recommendations of treating physicians. A 2022 ProPublica report showed that Cigna used an AI-driven system to deny more than 30,000 claims in just two months, often without a human review. The following year, a class-action lawsuit accused UnitedHealth of using its AI tool, nH Predict, to prematurely cut off care for elderly patients. That lawsuit was filed in 2023, just a year before UnitedHealth CEO Brian Thompson was murdered on a New York City street prompting wide discussion about how insurance giants use denials to control their costs. "The genesis of this bill came to me with the murder of the United Healthcare CEO. One of the alleged motives was the denial basis by that company, and there's currently a class action that shows allegedly that 90 percent of their claims were denied with errors when they utilized AI," Ms. Cassel said. Representatives from the Florida Insurance Council, the American Property Casualty Insurance Association, and the Personal Insurance Federation of Florida argued against the bill. They said it could slow down the claims process and increase consumer costs, maintaining that existing laws already ensure fair claims handling. "This is a policy decision for the legislature," the state's insurance commissioner, Michael Yaworsky, told a Senate committee last month, according to WUFS. He expressed a desire for a regulatory path where, "if it is being used, it is being used responsibly, known to the regulator." An amendment has expanded the bill to include workers' compensation and HMOs. The bill now heads to another committee before it can reach the House floor.