Florida Legislation Addresses AI Use in Insurance Claim Denials

Florida lawmakers are considering legislation that would restrict how insurance companies use artificial intelligence to deny claims. House Bill 527, presented by Rep. Hillary Cassell, gained approval from the House Subcommittee on Banking and Insurance in December 2025. The bill would prohibit insurers from denying claims solely on the basis of automated AI outputs, requiring human review in the decision-making process.

What the Bill Proposes

The legislation responds to concerns about automated decision-making in insurance claims, particularly following hurricane-related claims in Florida. The bill aims to restore policyholder confidence by ensuring that claim denials involve human judgment rather than relying solely on AI systems.

Rep. Cassell stated during the hearing that the legislation focuses on accountability and restoring confidence for policyholders. The bill does not ban the use of AI in claims processing but requires that automated outputs cannot serve as the sole basis for denying a claim.

Industry Concerns

The insurance industry has expressed concerns about the proposed restrictions. Industry representatives told legislators that House Bill 527 could impose requirements that limit the use of AI in claims handling, potentially reducing efficiency and speed. They argued that these limitations could ultimately harm consumers who expect timely claim resolutions.

At an insurance summit in Orlando earlier in December, industry leaders discussed AI’s growing influence in the insurance sector. Florida State University professor Charles Nice noted that technology is changing how insurers deliver their products and services.

The debate reflects broader tensions about AI’s role in the insurance industry. While insurers acknowledge that AI offers efficiency gains and cost savings, policyholders and consumer advocates argue that automated systems lack the judgment and context that human reviewers provide.

Consumer Perspective

Florida residents have expressed support for the proposed restrictions. New Florida residents Gary and Tracy told WPTV that they agree with the bill’s intent, noting that automated systems remove the human element and emotional context from claim decisions.

The use of AI in insurance claims processing has expanded rapidly in recent years. Insurers use AI systems to analyze damage assessments, review policy language, and identify potential fraud. However, concerns have emerged about whether these systems adequately account for the unique circumstances of individual claims.

Implications for Florida Property Owners

For Florida property owners, the legislation could affect how insurance claims are processed and resolved. If passed, the bill would require insurers to include human review in claim decisions, potentially adding time to the claims process but also providing policyholders with greater assurance that their claims receive thorough consideration.

Florida’s property insurance market has faced significant challenges in recent years, including carrier insolvencies, rising premiums, and disputes over claim payments following hurricanes. The proposed legislation adds another layer to the ongoing debate about how to balance insurer solvency, consumer protection, and market stability.

Property owners who file claims would still need to provide documentation and comply with policy requirements. However, the legislation would ensure that automated systems cannot deny claims without human oversight.

Legislative Process

House Bill 527 now advances through the legislative process. Additional debate is expected as lawmakers weigh consumer protection concerns against industry arguments about efficiency and cost. The bill will need to pass through additional committees before reaching the full House for a vote. If it passes the House, the Senate would need to approve its own version or adopt the House bill before it could be sent to the governor for signature.

The outcome will depend on how lawmakers balance the competing interests of policyholders, who want assurance that claims receive fair review, and insurers, who argue that AI tools improve efficiency and reduce costs.

What This Means for Real Estate Businesses

Insurance is a critical component of real estate operations in Florida. Property owners, developers, and investors all rely on insurance to protect their assets from hurricane damage, flooding, and other risks. How insurers process claims affects not only individual policyholders but also the broader market for property transactions and financing.

Real estate professionals should monitor the progress of House Bill 527 and consider how changes to claims processing might affect their clients and properties. Understanding the rules governing insurance claims helps property owners make informed decisions about coverage and risk management.

Financial and Risk Management for Florida Real Estate

Insurance costs and claim outcomes directly affect the financial performance of real estate investments. From portfolio accounting to risk assessment and financial planning, addressing the complexities of Florida’s property insurance market requires clear data and strategic thinking.

At James Moore, we work with real estate developers, investors, and property managers to address the financial and operational challenges of managing Florida properties. Whether you’re evaluating insurance costs, planning for storm damage, or managing a portfolio of properties, our team provides the accounting and advisory support you need.

Connect with our real estate team to discuss how we can help you address the financial considerations of property ownership in Florida.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.