In a significant maneuver to establish regulatory frameworks around insurance practices, the Colorado Insurance Division adopted Regulation 10-1-1 on September 21, 2023. The regulation, officially titled “Governance and Risk Management Framework Requirements for Life Insurers’ Use of External Consumer Data and Information Sources, Algorithms, and Predictive Models,” effectively came into enforcement from November 14, 2023.
Impacting any life insurer authorized to conduct business within Colorado, the new regulation exemplifies the burgeoning era of predictive analytics and algorithm-based decision-making functions in the insurance industry. Due to the pervasive nature of these technologies, the demand for sound governance frameworks and risk management protocols is more pressing than ever.
The regulation stipulates the obligation for insurers to provide a report by June 1, 2024. This report is expected to summarize the progress made by the insurance firms towards achieving compliance with the provisions specified in the new regulation. Full text of the regulation can be found here.
This legislative move illustrates a growing trend among regulatory authorities to ensure the usage of consumer data, predictive modeling, and algorithms in the insurance domain are effectively safeguarded and responsibly managed.
Colorado’s initiative is anticipated to inspire other states’ insurance departments to implement similar controls. As data and technology continue to transform the insurance industry, maintaining harmony between innovative practices and consumer protection measures remains a primary focus for regulatory agencies.