Is AI Denying My Insurance Claim?
AI Is Involved, But Not Acting Alone
AI is increasingly being used in insurance claims processing for both home and commercial policies, but it's not necessarily making the final denial decision. Companies are using tools like scrubbing platforms, in which AI can look at the information and tell the company whether they need to send the claim to a human to make a judgment call. The reality is more nuanced—AI assists in the process, but the extent of human oversight varies significantly.
How AI Evaluates Your Claim
For property claims, AI analyzes damage photos, estimates repair costs, and flags potential issues. AI-powered claim management systems can process 70–90% of simple insurance claims in a straight-through manner, with claims decisions delivered in minutes rather than weeks. This means straightforward claims may be approved automatically, but AI also identifies claims requiring human review.
The concern arises when AI makes recommendations that adjusters simply rubber-stamp without proper investigation.
Lawsuits and Regulatory Scrutiny
The use of AI in claim denials is generating legal challenges. A class-action lawsuit against UnitedHealth Group, the nation's largest insurer, alleges that an algorithm was used to deny nursing home care to its Medicare Advantage beneficiaries, resulting in their deaths. While this involves health insurance, the principles apply broadly.
Courts are beginning to allow policyholders to investigate how AI influenced their claim decisions. In the case The Estate of Gene B. Lokken v. UnitedHealth Group, Inc., the plaintiffs alleged that the defendant insurer had denied claims using an artificial intelligence program without human review. When the insurer refused discovery, the Minnesota federal court granted the motion to compel.
Human Oversight Still Required
Despite AI's capabilities, most insurers maintain some level of human review. 75% of claims professionals believe AI needs human oversight. However, only 22 states have adopted rules or guidance that specifically address AI, leaving many policyholders without regulatory protection.
What This Means for Your Claim
If your home or commercial insurance claim was denied, AI likely played a role in the evaluation process. The system may have:
- Analyzed damage photos and underestimated repair costs
- Flagged your claim as suspicious based on patterns
- Applied policy exclusions automatically
- Routed your claim away from experienced adjusters
Protecting Your Rights
If you suspect AI-driven denial was improper, document everything and request a detailed written explanation. Ask specifically whether AI was used in evaluating your claim and demand human review. Consider consulting an attorney, as requests for AI chat files, use policies, and documents concerning oversight of AI should now be a standard part of every policyholder's discovery requests in coverage litigation.
The bottom line: AI isn't necessarily denying your claim outright, but it's heavily influencing the process—and without proper oversight, errors and unfair denials can occur.
