The Texas Insurance Regulator Expects a Person to Review and Agree With Consequential AI Decisions

The Texas insurance regulator has told the entities it regulates what it expects when they use AI. The Texas Department of Insurance, TDI, did so in Commissioner's Bulletin B-0003-26, dated June 12, 2026. It is addressed to all regulated entities and their agents and representatives.

If a regulated entity uses AI to make a consequential decision, the bulletin says, TDI expects a person "to review and agree with all decisions before action is taken." Parts of the bulletin follow, not the whole.

What the Bulletin Does

The bulletin opens with a reminder. It concerns decisions or actions impacting consumers that are made or supported by advanced analytical and computational technologies, including AI. They must comply with all applicable insurance laws and regulations. That includes laws on unfair trade practices and unfair discrimination, it says.

The bulletin then sets out what TDI expects. The subject is how regulated entities will govern the development, acquisition and use of AI technologies in their operations. Those expectations extend to any third party working with a regulated entity, it says. The bulletin also tells them what type of information and documentation TDI may request during an investigation or examination.

Laws the Bulletin Names

TDI expects regulated entities to comply with all applicable laws and regulations when using AI, the bulletin says. It then lists chapters of the Texas Insurance Code, introduced by the word "including." Some of them follow.

One chapter sets forth standards for the investigation and disposition of claims, the bulletin says. Those are claims arising under policies or certificates of insurance issued to residents of Texas. Another prohibits refusing or limiting coverage on grounds the bulletin lists, among them race, age and disability. Another requires that rates be just, fair, reasonable and adequate.

The bulletin also names the chapter on insurance adjusters. It requires, the bulletin says, that certain acts may be taken only by a person who holds a license to act as an adjuster. Those acts include investigating or adjusting losses and supervising the handling of claims. And the chapter on utilization review agents, in the bulletin's words, "prohibits using AI to make an adverse determination."

Guidance and Expectations

Decisions made using AI must comply with the legal and regulatory standards that apply to those decisions, the bulletin says. At a minimum, those standards require that decisions are not "inaccurate, arbitrary, capricious, or unfairly discriminatory." Compliance is required, the bulletin says, regardless of the tools and methods used in decision-making.

The bulletin says it is important that regulated entities adopt and implement controls. Their purpose is to mitigate the risk of adverse outcomes for consumers. If a regulated entity uses AI to make a consequential decision, TDI expects a person to review and agree with all decisions before action is taken. TDI also encourages the development and use of verification and testing methods. Their aim is to identify errors and bias in the use of AI.

The bulletin does not say what makes a decision consequential. Who decides that, the entity or the examiner?

Monitoring, Documents and Authority

TDI will monitor the use of AI through examinations and product filings, the bulletin says. It welcomes complaints from consumers about the use of AI and will investigate accordingly. All regulated entities using AI "should be able to furnish procedures and protections" on request by TDI.

Regulated entities should expect that monitoring to include inquiries. The bulletin names governance frameworks, risk management, data and privacy protections, and internal controls. TDI may also ask questions about any specific use of AI or its application.

The bulletin's goal "is not to prescribe specific practices or documentation requirements," it says. The goal is to ensure regulated entities are aware of TDI's expectations as to how AI will be governed and managed. It is also to make them aware of the kinds of information and documents TDI expects a regulated entity to produce when requested.

What would an entity hand over to show that a person reviewed and agreed?

Nothing in the bulletin limits TDI's authority, it says. That authority covers any regulatory investigation, examination or enforcement action TDI is authorized to perform.