In latest weeks numerous states have adopted the Model Bulletin: Use of Artificial Intelligence Systems by Insurers (the “Mannequin Bulletin”) adopted final December by the Nationwide Affiliation of Insurance coverage Commissioners (“NAIC”). Alaska[1] was the primary state to undertake the Mannequin Bulletin again in February, adopted by Connecticut[2] and New Hampshire,[3] with Illinois,[4] Vermont,[5] and Rhode Island[6] opting to undertake the Mannequin Bulletin earlier this month. The phrase on the grapevine is that Maryland and Pennsylvania shall be subsequent.
Connecticut is an outlier amongst these states which have adopted the Mannequin Bulletin such that Connecticut requires insurers domiciled there to certify to their compliance. The Artificial Intelligence Certification is due on September 1, 2024, and yearly thereafter.
Not all states are selecting to undertake the Mannequin Bulletin. California, Colorado, and New York have every taken a special strategy.
- California: In June 2022, the California Division of Insurance coverage issued Bulletin 2022-5[7] which broadly addresses allegations of racial bias and unfair discrimination in advertising, ranking, and claims practices by the insurance coverage trade. This broadly worded bulletin applies not solely to insurance coverage firms but in addition licensed insurance coverage intermediaries. Moreover, in its utility to “Large Information,” fashions and algorithms, it implicates synthetic intelligence and machine studying.
- Colorado: Following the enactment of SB21-169[8] which prohibits unfair discrimination by way of the usage of exterior client knowledge, the Colorado Division of Regulatory Companies (“DORA”) has been creating enterprise line particular laws, particularly Regulation 10-1-1[9] pertaining to life insurers’ use of algorithms and predictive fashions, whereas separate laws protecting personal passenger auto and medical insurance are within the works.
- New York: In January 2024, the New York Division of Monetary Providers (“DFS”) issued for public remark a proposed circular letter pertaining to the usage of synthetic intelligence methods and exterior client knowledge and data sources in insurance coverage underwriting and pricing. The DFS proposal could be relevant to all insurers licensed to put in writing insurance coverage in New York and incorporates points of each the Mannequin Bulletin and Colorado’s Regulation 10-1-1. The general public remark interval closed on March 17, 2024.
Whereas it’s seemingly within the quick time period that extra states will undertake the Mannequin Bulletin, as evidenced by California, Colorado, and New York, some states could select an alternate route.
Locke Lord will proceed to observe developments pertaining to the regulation of synthetic intelligence, algorithms, huge knowledge, machine studying, and predictive modeling within the insurance coverage trade. In case you have any questions, please attain out to the writer or your Locke Lord accomplice.
[1] Alaska Division of Commerce, Group, and Financial Improvement, Division of Insurance coverage, Bulletin B 24-01, Re: The Use of Artificial Intelligence Systems in Insurance (February 1, 2024).
[2] Connecticut Insurance coverage Division, Bulletin No. MC-25, Re: The Use of Artificial Intelligence Systems in Insurance (February 26, 2024).
[3] State of New Hampshire Insurance coverage Division, Bulletin #INS 24-011-AB, Re: Use of Artificial Intelligence Systems by Insurers (February 20, 2024).
[4] Illinois Division of Insurance coverage, Company Bulletin 2024-08 The Use of Artificial Intelligence Systems in Insurance (March 13, 2024).
[5] Vermont Division of Monetary Regulation, Insurance coverage Division, Insurance Bulletin No. 229, The Use of Artificial Intelligence Systems in Insurance (March 12, 2024).
[6] Rhode Island Division of Enterprise Regulation, Insurance coverage Division, Insurance Bulletin Number 2024-03, Use of Artificial Intelligence Systems by Insurers (March 15, 2024).
[7] California Division of Insurance coverage, Bulletin 2022-5, Re: Allegations of Racial Bias and Unfair Discrimination in Marketing, Rating, Underwriting, and Claims Practices by the Insurance Industry (June 30, 2022).
[8] Colo. Rev. Stat. § 10-3-1104.9
[9] 3 Colo. Code Regs. § 702-10.
