AI Frontier Institute

AI USE IN HEALTH INSURANCE ACT

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Illinois SB1425, introduced January 31, 2025 by Sen. Laura Fine, creates the Artificial Intelligence Systems Use in Health Insurance Act. Under Section 10, the Illinois Department of Insurance gains explicit regulatory oversight of insurers' use of AI systems and predictive models, including authority to conduct investigations and market conduct actions covering development, implementation, and outcomes of those systems. Section 10(b) prohibits insurers authorized to do business in Illinois from issuing any adverse consumer outcome—defined in Section 5 as a claim denial or decision that adversely impacts a consumer in violation of regulatory standards—that results solely from an AI system or predictive model. Any such decision must be meaningfully reviewed by a human with authority to override the AI. Section 15 authorizes the Department to adopt rules setting disclosure standards for insurer use of AI systems. Section 20 requires all authorized insurers to comply with applicable insurance laws, including unfair trade practices and anti-discrimination statutes, when using AI or machine learning. Section 25 and the conforming amendment to the Illinois Administrative Procedure Act (5 ILCS 100/5-45.65 new) authorize the Department to adopt emergency rules to implement the Act, with that emergency rulemaking authority expiring one year after the Act's effective date.

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