This CLE course will discuss how an insurer’s use of artificial intelligence, whether algorithms or generative AI, in underwriting and claims investigation, adjusting, denial, and settlement may give rise to a claim of bad faith.

Description:

Insurers are eagerly using AI-driven software and automated processes for everything possible: underwriting, premium calculation, claims adjustment, and other functions previously done in-house with the involvement of and under the supervision of humans. 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.

Listen as this experienced panel discusses liability arising from the use of AI by insurers.