Insurers’ AI Use for Coverage Decisions Targeted by Blue States

Key Points:

  • States are implementing regulations to address potential discriminatory practices in insurance algorithms, impacting insurers such as State Farm, Cigna, and UnitedHealth.
  • The use of AI in underwriting has led to both increased policy sales and concerns about biased risk and pricing models.
  • The complex patchwork of state regulations and the opaque nature of AI decision-making are posing challenges for insurers, potentially leading them to reconsider the use of AI and external data.

Summary:

States such as Colorado, New York, California, and others are stepping up to regulate insurance algorithms amid concerns about discriminatory practices. Insurers like State Farm, Cigna, and UnitedHealth have faced legal actions alleging unfair treatment of minorities and older customers due to their use of automated processes to deny coverage. The advance of AI in underwriting has allowed insurers to sell more policies but has also raised concerns about biases in risk and pricing models.

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