Legal professionals should be aware that the Colorado Division of Insurance (CDI) has adopted a new regulation concerning the use of external consumer data and information sources (ECDIS), as well as predictive models incorporating ECDIS (Models), by Colorado-licensed life insurers. The regulation, finalized on September 21, 2023, sets forth requirements aiming to prevent unfair discrimination based on race by life insurers using ECDIS and predictive models.
The final rule is a significant development in the sphere of insurance regulation, demonstrating the increasing prominence of big data and predictive analytics in the industry. Yet, it also highlights the potential risks and regulatory scrutiny that these technologies may entail, particularly regarding concerns of unfair discrimination.
The newly established regulation delineates governance requirements for the use of ECDIS and Models by life insurers in Colorado. The intent is to ensure fair treatment of insured individuals, particularly with regard to race. It marks a move towards more stringent oversight of insurers’ use of data and predictive analytics. As technologies advance, this kind of regulation may become an increasingly common feature of the regulatory landscape, with potential ramifications for major global insurers and legal professionals working in the insurance sector.
Please refer to the published regulatory update for more detailed insights into the regulation.
Owing to the burgeoning role of data and predictive analytics in the insurance industry, legal professionals must stay abreast of the emerging regulatory environment. The Colorado regulation provides a case study of the measures that regulators may employ to ensure that the use of such technologies do not result in unfair discrimination. As these technologies continue to be adopted, it’s crucial to understand and navigate the evolving regulatory terrain.