Insurance Companies Deploy AI Systems to Deny Claims Faster, Raising Concerns Over Patient Care

Insurance Companies Already Deploying AI Systems to Deny Claims Faster Than Ever Before

Can't-miss innovations from the bleeding edge of science and tech No one who's dealt with one would ever accuse an insurance claims adjuster of being too generous, but now they might wish they had. That's right: in 2026, a major trend emerging in personal lines insurance -- the health, home, and auto insurers most of us think about when someone mentions underwriting -- is AI automation. In the US, when a person with, say, a scratchy throat goes to an in-network family clinic for a rapid strep test, that bill is submitted to the patient's insurer via a standardized claim form. Any human claim adjuster could see the obvious medical need for that test, and would likely approve it. But if that human adjuster were replaced with an automated AI system -- replete with all their well-documented technological flaws -- things become a lot less certain. Take the case of Iris Smith, an 80-year-old Florida retiree suffering from arthritis. As an investigation by the Palm Beach Post found, Smith may be the victim of AI-fueled preauthorization denials, as her home state is one of six exploring an AI Medicare screening program. "I don't think a corporation... should be telling people what they can and can't do," Iris Smith, an 80-year-old Florida retiree suffering from arthritis told the Palm Beach Post in an investigation into the phenomenon. "My doctors know me. I know my doctors. And when I'm in pain -- which is every morning, waking up to two fists that can barely open -- I need something to take care of the pain." Florida representative Lois Frankel, a fierce opponent of the pilot program, told the Palm Beach Post she's going to fight against any expansion of the effort into other US states. "We believe Medicare was based on a promise that if your doctor says you need care, if you're hurt and you need care, Medicare will be there for you, not AI." With AI, clerical errors or technicalities on the form, and even errors with the AI system itself, can automatically result in denied claims. What's more, insurance companies -- which are always working on complex models to manage the flow of claims, and therefore minimize financial losses -- are increasingly using AI to tighten the faucet. It's an attractive idea for insurance executives: by 2023, nearly 88 percent of auto insurance companies were reported to be using or planning to use AI for claims. According to a 16-state survey by the National Association of Insurance Commissioners, 84 percent of US health insurers are already using AI to handle things like prior authorization for medical care. Where health insurance is concerned, the result is an escalation of the already despicable situation forced on patients by a lack of public insurance option (owing in no small part to commercial insurance giants themselves). There are currently 22 states that have refused to adopt regulations for the use of AI in underwriting. These include the insurance industry's typical friends like Florida and Georgia, but also some surprising entries like Oregon and Minnesota. While states may be the last line of defense for consumers against unscrupulous personal lines insurers, the development is a searing indictment on the industry as a whole.

AI is doing the dirty work for insurance companies, and it's getting worse

AI is getting really good at saying no to your insurance claims, and the numbers are distressing. Insurance claims adjusters have never had a reputation for generosity. But at least they were human. That's changing fast, and not in your favor. A report by Futurism details how AI automation is now a major trend in personal insurance, the health, home, and auto coverage most of us rely on. Is your doctor's opinion even part of the process anymore? It doesn't seem that your doctor's opinion carries that much weight now. A Palm Beach Post investigation found that Iris Smith, an 80-year-old suffering from arthritis, may be a victim of AI-fueled preauthorization denials. In another case, UnitedHealth is currently facing a class-action lawsuit alleging that AI-denied Medicare nursing care contributed to patient deaths. Meanwhile, a National Association of Insurance Commissioners survey found 84% of health insurers are using AI, with 68% deploying it for prior authorization approvals. Recommended Videos Most people give up and don't even appeal these rejections because the process is too confusing or exhausting, which, if you're an insurance company, is the outcome you want. The worst part is that we know AI isn't always accurate and has a tendency to hallucinate. It's one thing if it makes a mistake while writing a report, but it's a completely different ball game when it ends up denying medical aid to someone who truly needs it. Is there anyone protecting your interests? Florida Representative Lois Frankel isn't having any of it. She told the Palm Beach Post she plans to fight any expansion into other states. "We believe Medicare was based on a promise that if your doctor says you need care, if you're hurt and you need care, Medicare will be there for you, not AI." But if the past is any indication, her fight alone won't be enough. Florida lawmakers tried to pass a bill in 2025, requiring human review for AI-generated denials. It passed the House, died in the Senate, and a Trump executive order discouraging state AI regulations didn't help. The silver lining, if you can call it that: nonprofits like Counterforce Health now offer free AI tools that analyze your denial letter and draft a customized appeal, making it easier to fight back. It's AI versus AI at this point, and the world is growing gloomier by the day.