HB0035 104TH GENERAL ASSEMBLY

LRB104 03558 BAB 13582 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB0035

Introduced 1/9/2025, by Rep. Bob Morgan

SYNOPSIS AS INTRODUCED:

New Act
5 ILCS 100/5-45.65 new

Creates the Artificial Intelligence Systems Use in Health Insurance Act. Provides that the Department of Insurance's regulatory oversight of insurers includes oversight of an insurer's use of AI systems to make or support adverse determinations that affect consumers. Provides that any insurer authorized to operate in the State is subject to review by the Department in an investigation or market conduct action regarding the development, implementation, and use of AI systems or predictive models and the outcomes from the use of those AI systems or predictive models. Provides that an insurer authorized to do business in Illinois shall not issue an adverse consumer outcome with regard to the denial, reduction, or termination of insurance plans or benefits that result solely from the use or application of any AI system or predictive model. Provides that any decision-making process for the denial, reduction, or termination of insurance plans or benefits that results from the use of AI systems or predictive models shall be meaningfully reviewed, in accordance with review procedures determined by Department rules, by an individual with authority to override the AI systems and determinations. Authorizes the Department to adopt emergency rules to implement the Act and to adopt rules concerning standards for full and fair disclosure of an insurer's use of AI systems. Makes a conforming change in the Illinois Administrative Procedure Act.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Artificial Intelligence Systems Use in Health Insurance Act.

Section 5. Definitions. In this Act:

"Adverse consumer outcome" means a decision by an insurer that is subject to insurance regulatory standards enforced by the Department that adversely impacts the consumer in a manner that violates those standards or any claim denial as determined by the use of an AI System.

"AI system" means a machine-based system that can, with varying levels of autonomy, for a given set of objectives, generate outputs such as predictions, recommendations, content (such as text, images, videos, or sounds), or other outputs influencing decisions made in real or virtual environments.

"AI systems program" means a written program for the responsible use of AI systems that makes or supports decisions related to regulated insurance practices to be developed, implemented, and maintained by all insurers authorized to do business in the State.

"Algorithm" means a clearly specified mathematical process for computation and a set of rules that, if followed, will give a prescribed result.

"Artificial intelligence" or "AI" means a branch of computer science that uses data processing systems that perform functions normally associated with human intelligence, such as reasoning, learning, and self-improvement, or the capability of a device to perform functions that are normally associated with human intelligence, such as reasoning, learning, and self-improvement. "Artificial intelligence" or "AI" includes machine learning.

"Department" means the Department of Insurance.

"Machine learning" means a field within artificial intelligence that focuses on the ability of computers to learn from provided data without being explicitly programmed.

"Predictive model" means the processing of historic data using algorithms or machine learning to identify patterns and predict outcomes that can be used to make decisions or support decision-making.

"Third party" means an organization other than the insurer that provides services, data, or other resources related to AI.

Section 10. Regulatory oversight of the use of AI systems.

(a) The Department's regulatory oversight of insurers includes oversight of an insurer's use of AI systems to make or support adverse determinations that affect consumers. Any insurer authorized to operate in the State is subject to review by the Department in an investigation or market conduct action regarding the development, implementation, and use of AI systems or predictive models and the outcomes from the use of those AI systems or predictive models. The Department may also request other information or documentation relevant to an investigation or market conduct action, and an insurer must comply with that request. The Department's inquiries may include, but are not limited to, questions regarding any specific model, AI system, or application of a model or AI system. The Department may also make requests for information and documentation relating to AI systems governance, risk management, and use protocols; information and documentation relating to the insurer's preacquisition and preutilization diligence, monitoring, and auditing of data or AI systems developed by a third party; and information and documentation relating to implementation and compliance with the insurer's AI systems program.

(b) An insurer authorized to do business in this State shall not issue an adverse consumer outcome with regard to the denial, reduction, or termination of insurance plans or benefits that result solely from the use or application of any AI system or predictive model. Any decision-making process concerning the denial, reduction, or termination of insurance plans or benefits that results from the use of AI systems or predictive models shall be meaningfully reviewed, in accordance with review procedures established by Department rules, by an individual with authority to override the AI systems and their determinations.

Section 15. Disclosure of AI System utilization. The Department of Insurance may adopt rules that include standards for the full and fair disclosure of an insurer's use of AI systems that set forth the manner, content, and required disclosures.

Section 20. Compliance with Act. All insurers authorized to do business in Illinois shall comply with this Act regarding any decisions impacting consumers that are made or supported by advanced analytical and computational technologies, including AI systems and machine learning, and must comply with all applicable insurance laws and regulations, including laws addressing unfair trade practices and unfair discrimination. All decisions made and actions taken by authorized insurers using AI systems must comply with applicable federal and State laws, regulations, and rules.

Section 25. Rulemaking. The Department may adopt rules, including emergency rules, to implement and administer this Act.

Section 90. The Illinois Administrative Procedure Act is amended by adding Section 5-45.65 as follows:

(5 ILCS 100/5-45.65 new)

Sec. 5-45.65. Emergency rulemaking; Artificial Intelligence Systems Use in Health Insurance Act. To provide for the expeditious and timely implementation of the Artificial Intelligence Systems Use in Health Insurance Act, emergency rules implementing the Artificial Intelligence Systems Use in Health Insurance Act may be adopted in accordance with Section 5-45 by the Department of Insurance. The adoption of emergency rules authorized by Section 5-45 and this Section is deemed to be necessary for the public interest, safety, and welfare.

This Section is repealed one year after the effective date of this amendatory Act of the 104th General Assembly.