Insurance companies eagerly are adopting predictive analytics and even generative AI for underwriting, premium calculation, claims adjustment, and other functions previously done in-house. This shift is raising novel substantive, procedural, evidentiary, and discovery issues, not the least of which is the need for computer experts to explain everything from how algorithms work to attempting to justify their accuracy and reliability.

Policyholders assert that using software expressly designed to favor the insurance company is irreconcilable with the duty of utmost good faith and have filed the suits to show it.

These cases assert that AI fails to fairly and honestly investigate claims, uses formulas that artificially and unfairly lower settlement amounts, and is based on historically biased and inaccurate claims payment data incorporating decades of stereotypes and artificially suppressed values. Insurance companies and brokers are facing lawsuits for breach of contract, unjust enrichment, bad faith, RICO, conspiracy, negligence, professional malpractice, and in some states, violation of consumer protection laws.

Syllabus

1. Introduction to terminology: insurtech, AI, generative AI, and more
2. Automated adjustment software and programs explained
3. Increase in the use of AI and its impact on first- and third-party claim analysis
4. Contractual and extracontractual claims
   • Breach of contract
   • Bad faith
   • Consumer protection law
5. Evidentiary questions
   • Discovery
   • Use of experts
   • Access to the underlying algorithms and training materials used to develop the AI
6. Pending cases