It's hard to find an insurer that is not experimenting with AI in all its guises from extractive AI to full-on ChatGPT, Large Language Models (LLM), and Generative AI. Innovation must be undertaken with good governance however as these insurers will tell you.

A class action was filed in July 2023 against health insurer Cigna alleging that it illegally used advanced technology to automatically deny patients’ claims without opening their files.

The suit was filed in the US District Court for the Eastern District of California by public interest law firm Clarkson Law Firm P.C. It alleged that Cigna Corp. and Cigna Health and Life Insurance Co., which cover about 18 million people in the US, denied more than 300,000 requests for payments using the method over two months in 2022, spending an average of 1.2 seconds reviewing each request.

Source: Bloomberg Law

In December 2023 another class action was issued against Humana. 

The complaints, which aim at health insurers United Healthcare and Humana, have sparked fears that AI's integration in the health insurance sector will drive up coverage claims denials, preventing chronically ill and elderly patients from receiving quality medical care. A rash of coverage rejections is fueling calls to increase government oversight of the largely unregulated use of AI by the health insurance industry, experts told CBS MoneyWatch. 

CBS News

Director of Jel Consulting Eddie Longworth has led change in the insurance claims and supply chain sector over many decades and the Cigna case led him to do something about this unfair treatment of customers by algorithms and insurers who did not seem to apply them responsibly or fairly. In the late summer of 2023, he started a project to issue a conduct of best practice. Over a  hundred industry professionals lent their weight to the project. Eddie told journalists at a media briefing that the code was “built on general principles as much as detail”.

“We are trying to make this code applicable to any carrier, market, and supplier that works in the claims and supply chain industry environment,” he added. And on 31st January the Code of Conduct was launched in the offices of global law form DFW at the “Walkie Talkie” building overlooking the City of London's insurance market. 

Image licensed from Adobe 

It is often said that the moment an insurer makes a difference is when a customer makes a claim. That's when it proves its worth and capabilities. A customer deserves to be treated fairly and there is increasing focus on those cases where they are not. In the UK the Financial Conduct Authority (FCA) is acting to ensure that is the norm by making Consumer Duty a key responsibility for the financial services sector.

“Our new Duty sets higher and clearer standards of consumer protection across financial services, and requires firms to put their customers’ needs first.”

The Code of Conduct for the development, implementation, and use of AI in claims and across the supply chain is a practical code that will not only help insurers, suppliers and technology companies prove they apply the Consumer Duty ethics. It will help ensure the highest customer satisfaction ratings and that claimants are neither paid too much nor too little. 

Why wouldn't any insurance claims business want to sign up to the code? Or participant in the claims value chain?

The Code of Conduct gets straight to the point.

As for applying the Code of Conduct, the focus is on action.

If an insurer is to apply a customer-centric strategy this is a fundamental plank in the whole structure.

Find out more and sign up for the Code of Conduct here.