In July, the Innovation, Cybersecurity and Technology Committee of the National Association of Insurance Commissioners (NAIC) has unveiled an exposure draft of its instructive bulletin titled “Use of Algorithms, Predictive Models, and Artificial Intelligence Systems by Insurers” – known as the draft Model Bulletin.
The draft Model Bulletin, designed for distribution by state insurance departments to all insurers licensed within their jurisdiction, aims to offer regulatory guidance and clarify expectations around the use of Artificial Intelligence (AI) technologies.
The NAIC’s Innovation, Cybersecurity and Technology Committee – a body tasked with addressing issues arising from the convergence of insurance, innovation, and technology – introduced this initiative in a bid to maintain a robust and accountable insurance landscape in the wake of emerging AI applications.
The increasingly widespread deployment of advanced technologies such as AI, predictive modeling, and algorithms is transforming the insurance sector. These tools are being leveraged to help insurers better assess risk, price policies more accurately, detect fraudulent claims, and enhance their customer service offering.
However, while these advancements have provided insurers with new opportunities to increase efficiency and accuracy, they have also raised novel challenges in terms of ethical conduct, data integrity, and regulatory compliance. The draft Model Bulletin is thus intended as a key resource for addressing these issues and maintaining a fair and secure insurance landscape.
The exact contents of the draft Model Bulletin have not yet been released to the public. However, considering the NAIC’s past workings and position within the insurance ecosystem, the Bulletin is expected to contain detailed guidelines and best practices for insurers to follow when using AI tools, pertaining to critical areas such as transparency, accountability, and misuse prevention.
More details can be found via JD Supra.