Washington Makes Insurers Show Their Work, and Me Arguing With ChatGPT

Washington told claims departments that efficiency is not a substitute for investigation, software is not an explanation, and policyholders should not need a lawsuit to discover what is in their claim files. The Washington Office of the Insurance Commissioner adopted substantial amendments to its unfair claims settlement practices regulation. They take effect on October 18, 2026.

A special shout-out and thank you goes to insurance claims expert Steve Strzelec for sharing these new regulations. Steve knows these are important.

Washington’s insurance commissioner noted that automobile and homeowners claim counts had remained relatively consistent while consumer complaints and Insurance Fair Conduct Act notices increased. The commissioner also recognized the insurance claims industry’s movement away from in-person loss examinations and toward artificial intelligence, photo-based adjusting, estimating software, databases, and benchmarks.

Technology may make claim handling faster. It does not make an incomplete or inaccurate claim decision fair.

Perhaps the most important new requirement is that insurers must show their work. Washington policyholders will have the right, at reasonable intervals, to request broad portions of their first-party claim files. This includes claim notes, estimates, bids, plans, measurements, engineering and contractor reports, statements, photographs, videos, documents, and communications. The insurer generally has 15 business days to produce the appropriate materials.

An insurer may redact privileged material, third-party financial information, and certain criminal investigative records, but it must disclose whether anything was withheld or redacted. If it considers a request unreasonable, it must explain all its reasons in writing.

Policyholders too often negotiate while blindfolded. The insurer has the reports, pricing data, photographs, and internal reasoning, while the policyholder receives a number and is told that is the number. Washington has recognized that transparency should occur during the adjustment, not years later in discovery during litigation.

The rules also confront computerized claim handling. A reasonable investigation may not rely solely upon a database, estimating software, or benchmarks. An investigation must include a reasonable assessment of coverage, the scope and value of the loss, and the cost to mitigate, treat, repair, replace, or recover the damaged property.

Insurers remain responsible for the accuracy of evaluations made on their behalf. When an insurer uses a database, survey, estimating program, or benchmark for material prices or labor rates, the claimant may request the date and location of the data and the businesses that supplied it.

The computer may assist the adjuster, but it cannot become the adjuster. An insurer cannot hide behind its vendor, software, artificial intelligence, or mysterious market-price average. If the result is wrong, the insurer owns it.

Washington also put structure around delay. An insurer must generally complete its investigation within 30 calendar days after notice of the claim unless that cannot reasonably be done. If more time is needed, the insurer must explain why in writing and provide additional notices every 30 days.

Those notices must identify what remains outstanding and summarize significant decisions and actions. When a new adjuster takes over, the insurer must confirm that the adjuster has reviewed the file and is prepared to promptly continue the investigation. “Our investigation is continuing” will no longer be an adequate monthly incantation.

Emergency mitigation also receives needed attention. When the policy requires the insured to protect property from further damage, the insurer must approve the policyholder’s mitigation scope or provide an approved scope within five business days. If it rejects the submitted scope, it must explain why and itemize the disapproved amounts. Water does not stop migrating while everybody waits for an insurance committee meeting.

Public adjusters and appraisers receive additional protection. Treating a claimant differently because the claimant hired a public adjuster is expressly unfair. The insurer must recognize the public adjuster as the insured’s representative and timely provide pertinent claim information and the policy.

An insurer must also make a good-faith effort to settle before invoking appraisal. It may not require an appraiser to change an actual cash value or loss valuation during the appraisal process. The insurer may apply policy conditions to the completed award, but it may not turn independent appraisal into managed arithmetic.

Arguing With My ChatGPT

The amended regulation identifies as unfair the act of “[d]enying or refusing to pay claims in part or in full without conducting a reasonable investigation.” I read “in part” and reached what seems to me the sensible conclusion that if the insurer agrees it owes part of the claim, it cannot legally withhold that undisputed amount simply because the remainder is contested.

If an insurer admits owing $100,000 of a $300,000 claim, it owes at least that part. Pay the $100,000 and continue disputing the balance. The words “in part” should mean something, and admitted benefits should not become bargaining chips.

My ChatGPT disagreed with the certainty of my conclusion. It responded with the grammatical precision that sometimes makes lawyers useful and, at other times, makes people want to throw them overboard. According to my artificial sparring partner, “in part or in full” modifies the denial or refusal. The sentence means an insurer cannot partially or completely deny a claim without conducting a reasonable investigation. It does not expressly command immediate payment of every amount the insurer considers undisputed.

ChatGPT also pointed to the adoption history. The commissioner proposed a separate definition of “undisputed amounts” and a provision making their nonpayment an unfair claim practice. Both were removed from the final rule. My AI argues that if “in part” already imposed an unconditional duty to pay every undisputed amount, the deleted provision would have added little. Removing it suggests the commissioner declined to adopt an automatic partial-payment mandate.

I still think my interpretation is better as a matter of insurance good faith and common sense. Once an insurer unequivocally agrees that a specific amount is covered, owed, and presently payable, withholding it while another amount remains disputed should be unlawful. An insurer should not be permitted to say, “We owe you the money, but we are keeping it until you surrender something else.”

ChatGPT says I am blending what the law should require with what this particular sentence necessarily says. Its narrower interpretation is that the new language prohibits an insurer from denying or refusing any portion of a claim without a reasonable investigation. It does not, standing alone, establish that every figure appearing in an adjuster’s estimate must immediately be paid.

As I see it, the stronger partial-payment argument comes from reading the regulations together. Washington requires prompt, fair, and equitable settlements when liability has become reasonably clear. It prohibits withholding payment under one portion of coverage to influence another and requires prompt payment after the obligation to pay has been established.

Under those combined provisions, even ChatGPT concedes that an insurer that unequivocally acknowledges a specific amount is presently owed should face serious regulatory and bad-faith problems if it withholds the money. The deleted “undisputed amounts” provision would simply have made that duty unmistakable and eliminated arguments over when an estimate became an accepted payment obligation.

Maybe the drafters of the language will read this post and say if I am correct or the stupid AI is not really so stupid. As you and many insurance company attorneys tell me, I have a hard time accepting a different interpretation once I have deeply researched an issue.

The enforcement implications remain significant. The amendments delete language suggesting that claims standards become unfair only when violated often enough to constitute a general business practice. This does not turn every mistake into an automatic Insurance Fair Conduct Act lawsuit. Washington courts require an unreasonable denial as necessary proof to maintain an IFCA case. It is important to note that several amended regulations authorize attorney fees, litigation costs, and potentially enhanced damages when these requirements are met.

Other states should adopt Washington’s core principles. Policyholders should receive timely access to claim files. Insurers should disclose the information behind computerized valuations. Claim accuracy should remain the insurer’s responsibility. Regulators should demand specific explanations, impose meaningful deadlines, and protect the independence of policyholder representatives and appraisers.

Finally, as noted in Four Decades a Lawyer and Forty-Six AI Hallucinations, I encourage everybody to use artificial intelligence aggressively. Use it to research, organize, test arguments, locate weaknesses, and challenge assumptions. But do not blindly accept its first answer or your own. Artificial intelligence is valuable not because it always agrees with us, but because it can serve as an informed and tireless opponent.

I still believe an insurer should have to pay whatever portion of a claim it admits is owed. ChatGPT still says the new language does not establish that proposition as categorically as I would like. For now, the machine may have the narrower grammatical argument. I reserve the very human right to keep arguing that good faith requires the broader result.

Thought For The Day

“Of all the fire-mountains which, like beacons, once blazed along the Pacific Coast, Mount Rainier is the noblest in form.”
—John Muir