Florida Bill to Mandate Human Review of AI-Processed Insurance Claims Advances

Florida is advancing legislation to regulate the use of artificial intelligence (AI) in insurance claims processing. House Bill 527, sponsored by Rep. Hillary Cassel, requires that qualified human professionals review insurance claims instead of relying solely on AI algorithms and machine learning systems. The bill mandates human accountability for claim denials, with reviewers needing to document the role of AI in their decisions. An amendment to the bill expanded its scope to include workers' compensation and Health Maintenance Organizations (HMOs), sparking debate among industry stakeholders. The Florida Insurance Council expressed concerns about granting injured workers a right of action in workers' compensation cases where employers hold the policies. Additionally, the American Property and Casualty Insurance Association cautioned that limiting AI involvement could slow claims processing and potentially increase costs by reducing AI-driven error reduction. Rep. Cassel, Vice Chair of the House Insurance and Banking Committee, emphasized the bill addresses significant challenges posed by algorithm-driven claims decisions. She linked the measure's impetus to a high-profile case involving the denial of claims by a major health insurer employing AI systems, highlighting concerns about erroneous denials. The bill is progressing through the Florida legislature, with one more committee hearing remaining in the House and a Senate counterpart (SB 202) sponsored by Sen. Jennifer Bradley. Discussions with industry stakeholders continue as the legislature oversees the balance between AI integration benefits and necessary regulatory safeguards. The legislation exemplifies a growing trend in state-level insurance regulation focused on integrating AI oversight to ensure transparency, accountability, and fairness in claims adjudication. It also underscores legal and compliance considerations unique to insurance as a regulated industry, emphasizing the state's role in governing insurance claims processing over federal intervention.