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Insurance AI Under Fire for Alleged Racial Bias

In April, the National Association of Insurance Commissioners launched a pilot program for its AI Systems Evaluation Tool designed to assess how insurance companies govern artificial intelligence risks, with 12 states currently participating.
A 2022 federal class-action lawsuit against State Farm, brought by Black homeowners Jacqueline Huskey and Riian Wynn, alleged the insurer's algorithms disproportionately delayed and scrutinized their claims; a federal judge declined dismissal in March, allowing the case to proceed in discovery.
Cigna, Humana, and UnitedHealthcare have faced lawsuits over batch-denial algorithms that allegedly rejected thousands of claims instantly without meaningful human review; the Center for Economic & Social Justice stated the model relies on data sources known to be biased against communities of color.
State Farm denies the allegations, arguing the lawsuit relies on unsupported claims, but the federal judge declined dismissal; the evaluation tool addresses the black-box problem where insurers cannot or will not explain how their AI systems make decisions.
The NAIC plans to refine the tool based on pilot feedback in September and October 2026, with official adoption expected at the NAIC Fall National Meeting in November, as what began as an isolated lawsuit now signals a broader national reckoning over algorithmic decision-making in insurance.

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