By: Denham Property and Injury Law Firm
The integration of Artificial Intelligence (AI) into businesses sparks controversy. Initially a novel concept, AI has quickly become ubiquitous in society. Capable of performing tasks traditionally associated with human intelligence in the blink of an eye, AI raises concerns about potentially deeming certain human jobs obsolete. Conversely, AI diminishes some risk of human bias. Professional industries are embracing artificial intelligence as a tool more and more, including the insurance industry.
The rapid implementation of AI in the business of insurance has led the Kentucky Department of Insurance to release a bulletin on April 16th, reminding insurers to use this tool in an ethical way that complies with insurance laws and therefore does not exploit consumers or put them at risk, and prepares insurers for what they may have to provide in the event of an investigation regarding a potential violation of AI regulations.
The use of AI in the insurance industry is not risk free. There is potential for inaccuracy and bias. Liberty Richie of Merlin Law Group emphasizes, “Algorithms are only as good as the data they’re fed, and if that data is biased, then the results will be biased as well.” (Richie 2023) Discriminatory data and processes may lead to the violation of the Kentucky Unfair Claims Settlement Practices Act (UCSPA).
To avoid this, insurance companies must adopt corporate governance and protocols to oversee AI use, ensuring there are no violations of the DOI’s laws or regulations. Insurers must be prepared to demonstrate compliance with these regulations as well. As stated in the bulletin, “Market conduct actions are separate from, but may result from, individual complaints made by consumers asserting illegal practices by Insurers.”
The implementation of AI is inevitable, but that does not mean the insureds should have to worry about unfair claims handling. If you filed an insurance claim, it is likely that you are going through a trying period of your life. It is important that a real human can understand and empathize with your situation.
Denham Property & Injury Law Firm has the tools and expertise to hold insurance companies accountable for their actions. We can help you ensure your rights are protected and represent you against unfair claims handling as a result of AI implementation.