Frank S. Giaoui // January 19, 2026 
(Image credit: Tommy Diner/Unsplash.)
The rapid integration of Artificial Intelligence (AI) and Machine Learning (ML) into claims handling—from initial intake to settlement recommendations—is revolutionizing efficiency across the insurance industry. Yet for every gain in speed, a significant liability risk emerges: the bad faith claim. In liability insurance, a carrier’s core duty is to act in good faith to protect the insured from an “excess judgment”—a trial verdict exceeding policy limits. Historically, this duty has centered on the claims professional’s reasonableness when rejecting a settlement offer. While AI does not alter this