Bill Text: IL SB1425 | 2025-2026 | 104th General Assembly | Introduced

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Bill Title: 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.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-01-31 - Referred to Assignments [SB1425 Detail]

Download: Illinois-2025-SB1425-Introduced.html

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104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB1425 Introduced 1/31/2025, by Sen. Laura Fine 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.
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A BILL FOR
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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

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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

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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

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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:

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(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.