USA – FLORIDA Trends and Developments Contributed by: John David Dickenson, Tiffany Bustamante and Alexandra Schultz, Cozen O’Connor
or portion of a claim or reduce a claim be made by qualified human professionals”. Key provisions of HB 527 include the following. • Human decision requirement: The bill authorises insurers to use AI in assisting claim evaluations, but it expressly prohibits any AI or algorithm from serving as the sole basis for denying or reducing a claim payment. A qualified human professional, such as a licensed adjuster, must independently review the facts, verify AI-generated outputs and confirm coverage determinations. • Duties of human reviewers: The legislation out- lines specific responsibilities for human reviewers, requiring them to independently assess the claim file, validate AI findings and exercise discretion in rendering the final decision. • Documentation and transparency: HB 527 man- dates that insurers using AI must document the specific role played by AI systems in claims denials or reductions, describe its use in internal claims manuals and make those materials available to regulators. Denial notices to policyholders must identify the human decision-maker and, where applicable, indicate whether AI contributed to the evaluation. • Regulatory oversight and enforcement: The bill empowers the Office of Insurance Regulation (OIR) and Department of Financial Services (DFS) to monitor compliance through market conduct examinations and investigations. The Financial Services Commission is authorised to adopt imple- menting rules.
Florida’s legislative push has been shaped by real- world events and broader policy trends. Lawmakers have cited the 2024 fatal shooting of UnitedHealth- care’s CEO, reportedly triggered by a dispute involv- ing AI-driven claim denials, as well as class-action litigation alleging that an insurer’s AI tool yielded a 90% error rate in health claim denials (see Estate of Gene B. Lokken et al. v UnitedHealth Group, Inc. et al. , No 0:23-cv-03514-JRT-SGE (D. Minn. Nov. 14, 2023), Complaint ¶1). Closer to home, Florida’s aver- age homeowners’ claim denial rate surged to 46.7% in 2024, largely due to Hurricane Milton losses, fuel- ling concerns that automated systems could amplify consumer harm during crises (see Florida Hurricane Season Strikes Insurance Industry in Turmoil, Weiss Ratings (Sept. 5, 2025)). As Florida implements its AI regulations in insurance, several legal and compliance challenges will emerge for both regulators and insurers. The state’s insur- ance market stands at a critical juncture in 2026: AI offers potent tools to navigate Florida’s longstanding exposure to catastrophe risk and fraud, but it also raises concerns about removing human accountability from a process ideally rooted in trust, fairness and the restoration of policyholders. HB 527 reflects an evolving consensus: AI can assist and accelerate, but the ultimate judgement calls in insurance must remain human.
538 CHAMBERS.COM
Powered by FlippingBook