Insurance Companies, Agents, Brokers, Policies - As introduced, imposes requirements for health insurance issuers using artificial intelligence, algorithms, or other software for utilization review or utilization management functions. - Amends TCA Title 8, Chapter 27; Title 56 and Title 71.

SB 1261 requires Tennessee health insurance companies, including TennCare and pharmacy benefits managers, to follow strict rules when using artificial intelligence (AI) for healthcare decisions like approving treatments. It mandates that AI tools must base decisions on individual patient medical history and provider recommendations - not just group data - and cannot replace licensed doctors in determining medical necessity. Insurers must disclose AI use in their policies, regularly review AI performance, and ensure patient data is handled securely under HIPAA. The law prohibits AI from discriminating or causing harm and treats violations as unfair claims practices, allowing patients to sue for damages.