States Crack Down on Health Insurers’ Use of AI to Deny Claims

US States Crack Down on AI Use in Health Insurance Claim Denials

Health insurance companies are facing growing pressure over their use of artificial intelligence to deny claims. Across the United States, lawmakers are introducing legislation to restrict the practice of using AI alone as a basis for claim denials. This movement reflects increasing concerns about fairness, transparency, and accountability in automated decision-making.

New Laws Target AI-Driven Claim Denials

In 2025, more than 50 bills have been proposed at the state level to regulate how health insurers use AI in claims processing. States like Maryland and Arizona have already passed laws that prohibit insurance companies from relying solely on AI algorithms to deny claims. Several other states are close to enacting similar measures, signaling a broader push for oversight.

These laws aim to ensure that human review remains a crucial component when claims are denied. They also seek to prevent unfair or unexplained rejections that can arise from opaque AI systems.

Legal Challenges and Federal Scrutiny

Alongside legislative action, federal courts are allowing lawsuits against health insurers’ AI practices to proceed. This judicial scrutiny highlights the ongoing debate about the ethical and legal implications of using AI in sensitive areas like health insurance claims.

• Insurers are under pressure to improve transparency around AI decision-making.
• There is a demand for clear guidelines on when and how AI can be used in claims processing.
• Human oversight is emphasized to protect policyholders from unfair denials.

Despite some efforts by insurers to ease enforcement, the trend is moving toward stronger regulation and accountability. Insurance professionals need to stay informed about these legal developments as they may significantly impact claims workflows and compliance requirements.

What Insurance Professionals Should Consider

For those working in insurance, understanding the evolving legal landscape around AI use is critical. Companies will need to balance efficiency gains from AI with compliance and ethical considerations.

• Review current AI tools and processes for claims handling.
• Ensure transparency and documentation of AI decision criteria.
• Prepare for increased regulatory reporting and human review mandates.

Staying up-to-date can help insurance professionals adapt to new compliance demands and advocate for fair practices in claims management.

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