Regulatory Focus in Claims Handling: Key Takeaways from IRES 2025

I recently attended the IRES Foundation’s annual National School on Market Regulation—an important gathering of insurance regulators and compliance leaders across life, health, accident, and property/casualty sectors. It was clear from the discussions that regulatory scrutiny on claims operations is intensifying, particularly with regard to technology and AI.

Here are the most important points I took away from the sessions and panels:

The Claims Compliance Landscape Is Tightening

• Regulators are leaning heavily on carriers to oversee not just their own compliance efforts but those of any vendors they use.
  
  
• AI regulation is taking shape, led by the NAIC’s bulletin on the use of AI by insurers, adopted in 24 states. However, funding and resources at the state level for enforcement remain limited.
  
  
• Self-assessment and self-reporting on AI use and bias detection are becoming expectations.
  
  
• Digital communication gaps in claims files (e.g., missing texts from platforms like HiMarley) are creating audit issues for carriers.
  
  

Practical Implications for Carriers

• Carriers must maintain a complete, accessible digital claims file—including all channels of claimant communication.
  
  
• Third-party administrators (TPAs) are under the spotlight. Lack of oversight has led to repeated compliance issues. Carrier accountability remains.
  
  
• Regulators emphasized no “black box” AI solutions—you must be able to explain what your technology is doing and why.
  
  
• Some states are modernizing communication expectations: for example, "in writing" no longer means just paper mail—texts and emails count if documented.
  
  

Performance, QA, and Oversight

• Timely payment, accurate processing, and clear communication with claimants remain key regulatory metrics.
  
  
• Market conduct actions are often triggered by consumer complaints, especially around mental health parity, newborn claims, and transparency in plan marketing.
  
  
• Regulators want data they can verify—not spreadsheets, but traceable audit paths and evidence of root cause analysis.
  
  

AI, Big Data, and What Comes Next

• There's a growing regulatory demand for transparency around data use, model performance, and bias—especially in claims decision-making.
  
  
• Self-reporting issues (before a regulator finds them) is seen favorably and can help avoid fines.
  
  
• Model explainability, documentation, and validation will become a standard part of compliance reviews.
  
  
• NAIC and state regulators are forming working groups to define AI oversight mechanisms, and they are seeking industry input.
  
  
  

Final Thoughts

Compliance is no longer a back-office concern—it is a strategic imperative. Underwriting and Claims teams, legal, compliance, and AI partners must work in lockstep. At EvolutionIQ, we’re helping our clients stay ahead by ensuring their technology meets both operational and regulatory standards in real-time.

For any carriers building or buying AI-powered claims tools, remember: the burden of oversight is yours. Regulators are watching.

‍