California’s new consumer protection regulations governing automated decision-making technology (ADMT) are creating fresh compliance challenges for insurers and businesses using AI-driven tools.
Issued under the California Consumer Privacy Act, the rules apply to systems that replace or substantially replace human decision-making in “significant decisions,” particularly in areas such as financial services, employment, healthcare, housing, and education. Covered businesses must provide consumer notice, offer opt-out or appeal rights, conduct detailed risk assessments, and submit reports to the California Privacy Protection Agency outlining data use, cybersecurity safeguards, bias protections, and system limitations.
Karin Aldama, an insurance coverage attorney at Gallagher & Kennedy, was interviewed by Law360 and shared insights on how California’s automated decision-making regulations may affect insurers—particularly regarding how the rules could apply to underwriting and claims-handling decisions that incorporate AI tools.
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about the author
Karin Aldama handles complex commercial and business litigation and insurance coverage matters for mid-size to Fortune 500 companies in hospitality, finance, utilities, aerospace, and semiconductors. She helps corporate clients and governmental entities find insurance programs that meet their needs and obtain the coverage to which their policies entitle them.