104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB0035
 
Introduced , 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.


LRB104 03558 BAB 13582 b


 
 
A BILL FOR
 
HB0035LRB104 03558 BAB 13582 b


1    AN ACT concerning regulation.

2    Be it enacted by the People of the State of Illinois, 
3represented in the General Assembly:

4    Section 1. Short title. This Act may be cited as the 
5Artificial Intelligence Systems Use in Health Insurance Act.

6    Section 5. Definitions. In this Act:
7    "Adverse consumer outcome" means a decision by an insurer 
8that is subject to insurance regulatory standards enforced by 
9the Department that adversely impacts the consumer in a manner 
10that violates those standards or any claim denial as 
11determined by the use of an AI System. 
12    "AI system" means a machine-based system that can, with 
13varying levels of autonomy, for a given set of objectives, 
14generate outputs such as predictions, recommendations, content 
15(such as text, images, videos, or sounds), or other outputs 
16influencing decisions made in real or virtual environments. 
17    "AI systems program" means a written program for the 
18responsible use of AI systems that makes or supports decisions 
19related to regulated insurance practices to be developed, 
20implemented, and maintained by all insurers authorized to do 
21business in the State.
22    "Algorithm" means a clearly specified mathematical process 
23for computation and a set of rules that, if followed, will give 
 
 
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1a prescribed result. 
2    "Artificial intelligence" or "AI" means a branch of 
3computer science that uses data processing systems that 
4perform functions normally associated with human intelligence, 
5such as reasoning, learning, and self-improvement, or the 
6capability of a device to perform functions that are normally 
7associated with human intelligence, such as reasoning, 
8learning, and self-improvement. "Artificial intelligence" or 
9"AI" includes machine learning. 
10    "Department" means the Department of Insurance. 
11    "Machine learning" means a field within artificial 
12intelligence that focuses on the ability of computers to learn 
13from provided data without being explicitly programmed. 
14    "Predictive model" means the processing of historic data 
15using algorithms or machine learning to identify patterns and 
16predict outcomes that can be used to make decisions or support 
17decision-making. 
18    "Third party" means an organization other than the insurer 
19that provides services, data, or other resources related to 
20AI.

21    Section 10. Regulatory oversight of the use of AI systems. 
22    (a) The Department's regulatory oversight of insurers 
23includes oversight of an insurer's use of AI systems to make or 
24support adverse determinations that affect consumers. Any 
25insurer authorized to operate in the State is subject to 
 
 
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1review by the Department in an investigation or market conduct 
2action regarding the development, implementation, and use of 
3AI systems or predictive models and the outcomes from the use 
4of those AI systems or predictive models. The Department may 
5also request other information or documentation relevant to an 
6investigation or market conduct action, and an insurer must 
7comply with that request. The Department's inquiries may 
8include, but are not limited to, questions regarding any 
9specific model, AI system, or application of a model or AI 
10system. The Department may also make requests for information 
11and documentation relating to AI systems governance, risk 
12management, and use protocols; information and documentation 
13relating to the insurer's preacquisition and preutilization 
14diligence, monitoring, and auditing of data or AI systems 
15developed by a third party; and information and documentation 
16relating to implementation and compliance with the insurer's 
17AI systems program. 
18    (b) An insurer authorized to do business in this State 
19shall not issue an adverse consumer outcome with regard to the 
20denial, reduction, or termination of insurance plans or 
21benefits that result solely from the use or application of any 
22AI system or predictive model. Any decision-making process 
23concerning the denial, reduction, or termination of insurance 
24plans or benefits that results from the use of AI systems or 
25predictive models shall be meaningfully reviewed, in 
26accordance with review procedures established by Department 
 
 
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1rules, by an individual with authority to override the AI 
2systems and their determinations.

3    Section 15. Disclosure of AI System utilization. The 
4Department of Insurance may adopt rules that include standards 
5for the full and fair disclosure of an insurer's use of AI 
6systems that set forth the manner, content, and required 
7disclosures. 

8    Section 20. Compliance with Act. All insurers authorized 
9to do business in Illinois shall comply with this Act 
10regarding any decisions impacting consumers that are made or 
11supported by advanced analytical and computational 
12technologies, including AI systems and machine learning, and 
13must comply with all applicable insurance laws and 
14regulations, including laws addressing unfair trade practices 
15and unfair discrimination. All decisions made and actions 
16taken by authorized insurers using AI systems must comply with 
17applicable federal and State laws, regulations, and rules. 

18    Section 25. Rulemaking. The Department may adopt rules, 
19including emergency rules, to implement and administer this 
20Act.

21    Section 90. The Illinois Administrative Procedure Act is 
22amended by adding Section 5-45.65 as follows:

 
 
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1    (5 ILCS 100/5-45.65 new)
2    Sec. 5-45.65. Emergency rulemaking; Artificial 
3Intelligence Systems Use in Health Insurance Act. To provide 
4for the expeditious and timely implementation of the 
5Artificial Intelligence Systems Use in Health Insurance Act, 
6emergency rules implementing the Artificial Intelligence 
7Systems Use in Health Insurance Act may be adopted in 
8accordance with Section 5-45 by the Department of Insurance. 
9The adoption of emergency rules authorized by Section 5-45 and 
10this Section is deemed to be necessary for the public 
11interest, safety, and welfare.
12    This Section is repealed one year after the effective date 
13of this amendatory Act of the 104th General Assembly.