Comment from Bilyeu, Thomas

I respectfully urge the Federal Trade Commission to open a focused investigation into the use of artificial intelligence in insurance claims handling. The risk is not limited to one defective algorithm making one incorrect recommendation. A modern insurance claim may move through several AI systems embedded within an insurer-designed claims process: One AI interprets the First Notice of Loss. Another summarizes the reported facts. Another classifies the claim’s severity or complexity. Another selects its handling path. Another evaluates photographs and generates an estimate. Another assesses repairability, total-loss value, liability, or fraud risk. Another summarizes policy language or recommends a coverage application. Another recommends payment, escalation, further investigation, or closure. Each system can narrow the facts, choices, and conclusions available to the next system or employee. By the time the person called the “adjuster” receives the claim, multiple automated systems may already have framed the loss, selected the workflow, generated an estimate, and pointed the employee toward a proposed outcome. The appropriate subject of investigation is therefore not an individual AI model in isolation. It is the combined claims decision system: AI inputs + AI outputs + insurer-specific programming + workflow design + employee training + adjuster authority + escalation requirements + performance incentives. I. Measurable Warning Signs Justify a Deeper Investigation Available outcome data does not prove that AI caused every underpayment, denial, or claim closure. It does show that insurance claims are producing results serious enough to justify federal investigation. A. Homeowners claims closed without payment have increased dramatically An analysis of insurers’ statutory filings found that the national homeowners claims closed-without-payment rate increased from approximately 25.7% in 2004 to 39% in 2023 and 42.1% in 2024. Among approximately 6.8 million homeowners claims received and closed in 2024, more than four in ten closed without payment. Fourteen large insurers reported rates between 40% and 51%. () A claim closed without payment does not automatically establish misconduct. The category can include losses below the deductible, excluded losses, duplicate claims, consumer withdrawals, insufficient documentation, and other legitimate outcomes. But those explanations do not eliminate the trend. A change from approximately one-quarter of claims to more than four out of ten represents a major shift in consumer outcomes. It requires more detailed examination than the broad “closed without payment” category presently allows. B. Auto-liability claims show a similar long-term trend A review of New York private-passenger auto-liability filings found that insurers closed approximately 48.6% of claims without payment in 2025, compared with 33.6% in 2005. That is a movement from approximately one in three claims to nearly one in two. Allstate reportedly closed 55.5% of the relevant claims without payment, while two Progressive underwriting companies each reported 47.4%. () C. Right to Appraisal finds thousands of dollars beyond initial insurer evaluations Texas Watch, a nonprofit consumer advocacy group, reviewed 1,246 disputed auto claims that proceeded through Right to Appraisal. For repairable vehicles, appraisal increased the claim value by an average of approximately $5,307, or 131% above the insurer’s final offer. For total-loss claims, appraisal added an average of approximately $3,889, or 26%. Across all claims examined, independent appraisal identified more than $5 million in additional claim value. These were disputed claims, not a random sample of every auto claim. The results should not be projected across all claims or insurers. But the study demonstrates something significant: when qualified independent people reviewed contested insurer evaluations, they frequently identified thousands of dollars in additional damage or value. That leads to an important consumer-protection question: Why are claims increasingly closing without payment while independent review of disputed claims is identifying substantial amounts that the original process failed to recognize? The Commission should not assume that artificial intelligence caused these outcomes. It should determine whether AI, insurer-selected rules, fragmented workflows, and restricted human authority are contributing to, accelerating, or concealing them.