Automated Decision System
A system that uses AI or algorithms to make or materially influence decisions about consumers, such as coverage, pricing, or claims outcomes.
An automated decision system (ADS) is any system that uses data, algorithms, or AI to make or materially influence a decision about a consumer. The term is used in Colorado’s SB 26-189 and in broader AI policy discussions to frame the range of systems that require disclosure and oversight.
In insurance, an ADS might deny a claim, set a premium, recommend a denial, or route a case to a human reviewer. The regulatory focus is usually on decisions that have legal or material effects on consumers, such as coverage, pricing, claims, and prior authorization.
The key governance question is not whether the system decides on its own, but whether it materially influences the outcome. If it does, it should be inventoried, tested, monitored, and subject to human oversight. See our glossary entries on Colorado SB 26-189, algorithmic discrimination, and human-in-the-loop.