In an attempt to regulate governance and risk management framework requirements within the insurance industry, the Colorado Division of Insurance (DOI) is holding a virtual rulemaking hearing on August 31, 2023. As reported, this hearing pertains to the proposed regulation on life insurers making use of external consumer data and information sources, as well as specific algorithms and predictive models, commonly referred to as the ‘Life Governance Rule’.
The announcement of the rulemaking hearing was issued on July 31, presenting an update to the Life Governance Rule initially released on May 26. This rule is an integral part of the DOI’s statutorily mandated stakeholder process, which is primarily focused on ensuring and enhancing transparency, accountability, and risk management within the insurance industry.
The fast-track approach towards rulemaking adopted by the Colorado DOI exemplifies the importance of the topic and its potentially significant implications for life insurers, particularly those that employ modern data technologies and predictive models to improve underwriting efficiency and policyholder experience.
As digital transformation shapes the global business landscape, big data plays a pivotal role in shaping corporate strategies, influencing policy decisions, and streamlining business processes, including the insurance sector. Thus, it is crucial for legal professionals working in corporations and law firms to pay close attention to evolving regulatory frameworks surrounding big data governance.
The details of the proposed rule are not known yet. However, given its scope and potential impact, it is likely to delineate aspects concerning the use of external data sources, implementation of algorithms, and deployment of predictive models by insurers. Legal professionals need to prepare for the possible implications and changes that this proposed regulation could bring to the industry’s risk management practices.
This rule also stresses the essential role of multi-stakeholder engagement in policy-making, emphasizing that cooperation between technology providers, insurers, and regulators is crucial to holistically addressing associated risks and challenges.
This hearing offers an opportunity for all interested parties to voice their concerns, remarks, or support for the proposed rule, thereby ensuring that all key stakeholders participate actively in the formulation of comprehensive and effective governance for big data use within the insurance industry.