Revised guidance on clinical decision support (CDS) software from the U.S. Food and Drug Administration (FDA) could materially change liability exposure and loss potential for wellness technology companies.
Intended to reduce regulatory burdens that slow down innovation in low-risk technologies, the guidance declares that “not all clinical decision support software used in healthcare settings are devices subject to FDA oversight.”1,2
Companies might assume these products now carry lower risk. However, misalignment between product intent, design features and real‑world use can still create liability exposure, particularly when the tools influence decision‑making, client outcomes or professional judgment. Key to remaining on the right side of the guidance is understanding where a technology fits within the oversight recommendations.
Changes to Wellness Devices and Software
The FDA’s newly issued CDS guidance clarifies which software functions are excluded from device regulation and which design and intended-use factors can push software back into the medical device territory.
“All four criteria for the FDA’s new classification must be met for a product to be classified as a non-device CDS software under the FDA's 2026 guidance,” explains Tyler Holden, assistant managing director of Life Science at The Hartford. “If any criterion is not met, the software is classified as a device function.”
According to the FDA, certain CDS software functions could be excluded from the definition of device by section 520(o)(1)(E) of the Federal Food, Drug and Cosmetic Act if the software:
- Is not intended to acquire, process or analyze a medical image or a signal from an in vitro diagnostic device, or a pattern or signal from a signal acquisition system.
- Is intended for the purpose of displaying, analyzing or printing medical information about a patient or other medical information.
- Is intended for the purpose of supporting or providing recommendations to a healthcare professional about prevention, diagnosis or treatment of a disease or condition.
- Is intended for the purpose of enabling the healthcare professional to independently review the basis for such recommendations, so that the professional is not relying primarily on the software’s output to make a clinical diagnosis or treatment decision for an individual patient.
This table outlines the key changes:
| General Wellness Policy | CDS Guidance |
|---|---|
| Expansion of what can qualify as a general wellness product. | The FDA clarifies which CDS software functions may be excluded from device regulation and which remain device software functions. |
| Non invasive wearables can now track heart rate, blood pressure or oxygen levels for wellness purposes as long as they don’t claim to diagnose or treat medical conditions. | This technology can provide recommendations to a healthcare professional but can’t make or automate clinical decisions.3 |
| Non-invasive means “not implanted” and does not involve technology that could pose a safety risk without additional regulation. | The healthcare professional should be able to independently understand and evaluate the basis for the recommendation without relying on the software. |
Where Innovation and Regulation Meet
Despite the new guidelines, even low-risk wellness tools may still encounter scrutiny when AI is integrated into the product.
“We're starting to see more regulation in the AI space, because it's very complex and it's proliferating at a rate that’s hard to keep up with,” says Holden.
If a healthcare professional can’t independently review the basis for the recommendations of the software, so that they’re not relying primarily on those recommendations to make a clinical diagnosis or treatment decision for a patient, then the software doesn’t qualify as a non-device CDS and is subject to FDA regulatory oversight.
Instead of a “black box model” where algorithms deliver conclusions without transparent explanations, the FDA may expect companies to find a “glass box” approach that offers transparency into the logic, data inputs and validation behind those AI insights.4
The Smart Watch Example
A smart watch can help illustrate the boundary the FDA is drawing. A wearable that tracks health-related information for general wellness purposes may present a different regulatory profile than software that interprets that information in a way that influences medical decision-making.
As digital health tools evolve, the risk increases when software moves beyond displaying or organizing information and begins providing outputs that users or clinicians may treat as diagnostic, predictive or treatment-related recommendations. If an AI-enabled feature suggests that a user may have a heart condition, or otherwise produces outputs that carry heightened clinical significance, companies may face greater scrutiny over whether the software remains outside device regulation or falls back into medical device territory.
"Software that outputs risk scores, provides time-critical recommendations or lacks transparency in its underlying logic may fail the FDA’s CDS criteria, particularly criterion number four, and be classified as a device that impacts the digital health space as technology evolves," says Holden.
Although disclaimers may be present, AI-driven notifications can carry perceived authority, drawing a sharper line when AI outputs move from descriptive data to interpretive or predictive statements.
The Insurance Perspective: Prudent Risk Management
The new guidelines may appear to relax demands on wellness devices and CDS. However, as companies innovate, they may inadvertently cross back into a different classification.
When CDS is classified as a medical device, it shifts from a lower-risk advisory tool to a product liability exposure, introducing key liability implications such as:
- Defective design allegations
- Failure to warn claims
- Bodily injury claims tied to reliance on software outputs.
“Overall, CDS classification can significantly increase bodily injury, product liability severity and allegation complexity,” says Holden.
In the meantime, companies can use these strategies to help them follow the new guidance:
- Continue to involve the experts: Embed appropriate clinical or life science expertise in product development to avoid deploying AI-driven insights without sufficient understanding of medical implications.
- Use best practices: Conduct oversight and adopt voluntary governance, validation and quality controls — even when FDA guidance does not mandate them.
- Review marketing and disclaimers: Stay compliant by ensuring low-risk devices use language that avoids prescriptive diagnoses.
Prepare for the Future
It’s important for digital health companies to reassess where their technology falls under the FDA’s updated guidance and share with insurance carriers how they’re meeting the new standards across different business functions. Additionally, companies with ties to products placed in European Union markets will want to track and respond to standards and requirements overseas.
Connect with our Life Science team to understand how these regulatory shifts may affect a company’s products and how our coverage can help support innovation.
The information provided in these materials is intended to be general and advisory in nature. It shall not be considered legal advice. The Hartford does not warrant that the implementation of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) be an appropriate legal or business practice. The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business premises, locations or operations are safe or healthful, or are in compliance with any law, rule or regulation. Readers seeking to resolve specific safety, legal or business issues or concerns related to the information provided in these materials should consult their safety consultant, attorney or business advisors. All information and representations contained herein are as of June 2026.
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1 U.S. Food and Drug Administration, “Clinical Decision Support Software — Guidance for Industry and Food and Drug Administration Staff,” viewed May 2026.
2 Off the Press, “Makary Announces New FDA Guidance on AI,” viewed May 2026.
3 Covington & Burling LLP, “5 Key Takeaways From FDA’s Revised Clinical Decision Support (CDS) Software Guidance,” viewed May 2026.
4 IBM, “What Is Black Box AI,” viewed May 2026.
