Florida lawmaker: 83-year-old yet to receive Hurricane Ian damage help
During a committee hearing, State Rep. Mike Caruso said a woman is still waiting for an insurance company to assist with her Hurricane Ian damages.
- Florida lawmakers are examining the use of artificial intelligence in the insurance industry.
- AI is already being used by insurers for tasks like fraud detection and property assessment.
- Concerns were raised about AI potentially being the sole basis for denying claims or policies.
- Industry representatives stated that insurance companies remain responsible for AI-driven decisions and must comply with existing laws.
A soulless machine finding the rationale to deny your insurance claim or declining to write a policy safeguarding your valuables were among the scenarios Florida lawmakers pondered amid reports of artificial intelligence’s accelerating skills in the complex and hypernuanced world of insurance.
The backdrop to the public-policy discussion is the fast-paced developing AI technology that has launched a thousand scenarios that run the gamut across industries.
Artificial intelligence, according to a Oct. 6 U.S. Senate report, is going to replace 100 million human jobs in the next decade. It’s already reducing company costs and speeding up processes. And it’s going to address the looming national worker shortage.
Amid this disruptive context, state legislators held a committee hearing Oct. 7 with regulatory officials and industry representatives to find out whether new rules are needed to make sure the oncoming revolution won’t hit Floridians where they already hurt — insurance premiums and claims.
“AI — it is kind of a scary proposition,” said Thomas Koval, a retired insurance company executive and current board member of FCCI Insurance Group, a commercial insurer out of Sarasota.
But it’s already in use, lawmakers were told.
A chatbot on the state Department of Financial Services, which oversees insurance complaints and questions, responded to 13,000 consumers on its site since October 2024, for example. AI has been programmed to spot red flags for fraud and digest information about risky locations, House members learned. Drones that survey property damage and gather data about geographic risks, such as proximity to water, are already in use, testimony revealed.
The key is that the AI technology’s directions comply with existing rules and regulations within Florida law, said Koval, who was invited to speak at the hearing by state lawmakers.
“An AI system has to have guardrails,” Koval said. “It does not think in a vacuum. And so you plug in, you build those algorithms. Those guardrails are the ones that keep us within the insurance code and in compliance with what we’re supposed to be doing. … The human intervention is on the front end.”
Koval insisted that safeguards are needed to protect consumers.
“Hopefully, companies are building compliance guardrails that are bringing them really good information, really good results without violating or being out of compliance with insurance codes and regulations,” he said.
Republican state Rep. Hillary Cassel of Dania Beach, who works as a plaintiff attorney in insurance cases, spotlighted allegations that specific insurance companies have a 90% error rate in denying claims when AI alone was used to evaluate them.
Noting that the panel asserted that AI must abide by existing laws, Cassel asked, “what law in Florida is on the books that’s going to tell an insurance company that AI cannot be the sole basis for … a denial of a claim, whether it’s health insurance, property, et cetera?”
AI is not exempt from Florida law that requires insurance companies to settle claims fairly, Koval said.
“At the end of the day, who is responsible if there is a mistake in the claims-handling process, if it’s an AI platform, if it’s a human platform, the insurance company is always responsible, and we think that is the consistent piece here,” Koval said.
AI’s speed and efficiency at processing information could mean lower costs that will be passed on to policyholders, lawmakers were told.
Republican Rep. Nathan Boyles of Baker raised the issue of whether AI’s ability to digest information will mean that programs will be able to identify too many risks, disqualifying potential policyholders.
“How will you work to strike that balance between over targeting (customers) and … and then effectively writing people out of access to that market?” Boyles asked.
Paul Martin, vice president of state affairs for the National Association of Mutual Insurance Companies, said that companies that don’t pay claims and don’t write new policies will not be in business for long. AI is going to help insurers be more precise, he insisted.
“We now have this emerging market where policies are being written, claims are being paid with the help of AI,” Martin said. “It allows us to identify places that are risks that we previously thought, ‘That’s uninsurable,’ but now, upon further review, like instant replay, we can make that risk work.”
The panel urged the House subcommittee to address specific problems with AI as they emerge, rather than write legislation that covers AI in general.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.