AI Frontier Institute

Relating To Insurance.

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Hawaii S.B. 2953 (33rd Legislature, 2026) amends Chapter 431 of the Hawaii Revised Statutes by adding a new part to Article 13 establishing a comprehensive framework governing insurer use of artificial intelligence (AI) systems in insurance practices, effective July 1, 2026. The bill has three main components. First, under Sections 431:13-D through 431:13-F, all insurers using AI in any insurance practice affecting consumers must develop, implement, and maintain a written AI system governance program that includes board-level accountability, documented policies on AI procurement and retirement, data governance controls, model validation and testing protocols, third-party vendor oversight, and recordkeeping. Insurers must also conduct pre-deployment testing and continuous post-deployment monitoring to detect errors, bias, model drift, and cybersecurity risks. The Insurance Commissioner may examine records on request, and confidential trade secrets are protected. Second, under Sections 431:13-G through 431:13-J, health insurers are prohibited from using an AI system as the sole basis for an adverse medical necessity determination. Any AI-supported adverse determination must be reviewed and affirmed by a licensed clinician with relevant specialty experience. Health insurers must provide consumers and providers plain-language notice disclosing AI use, the primary factors behind the adverse determination, and appeal instructions. Health insurers using AI for utilization management must also track and retain performance metrics including denial and approval rates, appeal and overturn rates, clinician override rates, error rates, and disparity indicators. Third, under Sections 431:13-K through 431:13-O, property insurers may use aerial images or AI-derived aerial image outputs as the sole basis for nonrenewal of residential property insurance only if they provide the consumer with date-stamped images, disclosure of AI use, a plain-language explanation of the underwriting issue, and instructions for rebuttal or cure. Aerial images used for nonrenewal must be no older than twelve months unless the Commissioner approves an exception, with a maximum allowable period of twenty-four months by rule. Consumers receive a cure period of not less than sixty days to dispute the images or certify corrective action, and insurers must offer renewal on substantially similar terms if the issue is cured or successfully rebutted. Cross-insurer sharing of aerial image data linked to a consumer or property without written consumer consent is prohibited. All violations constitute unfair trade practices under Section 431:13-102, enforced exclusively by the Commissioner with no private right of action created.

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