What You Have to Know
- The brand new Colorado regulation will govern any use of an exterior client knowledge and data supply in reference to life insurance coverage.
- Scott Kosnoff expects the division to take an identical strategy for annuities.
- He believes the regulation may have an effect on advertising methods.
The Colorado Division of Insurance coverage final week adopted main rules that can govern life insurers’ use of any “exterior client knowledge and data supply,” or ECDIS.
That definition seems to incorporate conventional knowledge streams and analytical methods in addition to synthetic intelligence-based methods.
What may this imply for all times insurers, purchasers and monetary professionals?
Scott M. Kosnoff, a associate at Faegre Drinker, answered questions concerning the Colorado rules by way of electronic mail. The solutions have been edited.
THINKADVISOR: How does Colorado’s regulation examine with different jurisdictions?
SCOTT KOSNOFF: Colorado’s statute and regulation make it distinctive on this space.
The Nationwide Affiliation of Insurance coverage Commissioners is engaged on a mannequin bulletin that builds upon the NAIC’s AI rules, which have been adopted in 2020, and lays out regulatory expectations, together with with respect to governance; danger administration and inner controls; and third-party AI methods.
As soon as the NAIC finalizes and adopts the bulletin, particular person states will contemplate whether or not they wish to undertake the bulletin and, in that case, whether or not to make any modifications.
The California Division of Insurance coverage issued a bulletin regarding using AI, algorithms, Massive Knowledge and the necessity to keep away from unfair discrimination in opposition to protected lessons. It additionally held a workshop inspecting bias and discrimination in September 2022.
The New York Division of Monetary Companies retained an out of doors marketing consultant to conduct interviews relating to use of AI and machine studying by life insurers.
Connecticut issued discover regarding use of Massive Knowledge and avoidance of discriminatory practices and requires a certification from home insurers.
The District of Columbia is investigating potential “unintentional bias,” starting with personal passenger auto, and it carried out a knowledge name earlier this yr.
How is Colorado’s strategy totally different from typical states?
Colorado’s statute adopts a definition of unfair discrimination that departs from the best way the time period traditionally has been understood.
Colorado’s statute focuses on using exterior client knowledge and data sources, and never expressly on AI.
Colorado would require insurers to check for unfair discrimination, undertake a danger administration and governance framework and submit reviews to the regulators.
What implications may the Colorado regulation have for merchandise apart from life insurance coverage?
