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Insurer Bad Faith and Generative AI: Challenging or Defending Accuracy and Reliability of Insurer AI Tools

Navigating Novel Substantive and Evidentiary Issues Arising From Pervasive Use of AI in the Insurance Industry

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Thursday, March 21, 2024

Recorded event now available

or call 1-800-926-7926

This CLE course will discuss claims for insurer bad faith liability from the use of artificial intelligence in underwriting and claims investigation, adjusting, denial, and settlement. The program will discuss the basis for bad faith claims, novel legal issues, and current cases.

Description

Insurers are eagerly 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.

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

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Outline

  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
    1. Breach of contract
    2. Bad faith
    3. RICO
    4. Conspiracy
    5. Negligence/malpractice
    6. Consumer protection law
    7. Civil rights violations
  5. Evidentiary questions
    1. Use of experts
    2. Access to the underlying algorithms and training materials used to develop the AI
  6. Pending cases

Benefits

The panel will review these and other pivotal issues:

  • What kind of due diligence should insurance companies undertake before adopting AI, and for what claim should it be applied?
  • What is responsible use of AI in insurance?
  • Is insurtech reliable and what experts are needed to demonstrate that?
  • Where does the data supporting AI come from, and is it market-specific?
  • Is personalization of insurance classifications changing the nature of insurance?

Faculty

Gallozzi, Marialuisa
Marialuisa S. Gallozzi
Partner
Covington & Burling

Ms. Gallozzi has helped for-profit and nonprofit policyholders develop and execute efficient and practical insurance...  |  Read More

Horkovich, Robert
Robert M. Horkovich
Managing Shareholder
Anderson Kill

Mr. Horkovich focuses his practice on the area of insurance recovery. He has obtained over $5 billion in...  |  Read More

Ryles, Tim
Tim Ryles
Owner and President
Tim Ryles Consulting

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 |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include course handouts.

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