On September 27, 2023, Colorado’s Division of Insurance presented a new proposal aiming to impose stringent regulations on data testing for life insurance. This draft proposal is labeled “Concerning Quantitative Testing of External Consumer Data and Information Sources, Algorithms, and Predictive Models Used for Life Insurance Underwriting for Unfairly Discriminatory Outcomes,” also known as the “Testing Regulation”.
This proposed regulation primarily concerns the use of Artificial Intelligence (AI) data testing in life insurance underwriting. The Testing Regulation targets the potential for unfair discriminatory outcomes that these predictive models and algorithms may foster.
The Testing Regulation arrives as a development tied to the enactment of Colorado SB 21-169 in June 2021. However, it is crucial to note that the Division had previously adopted a similar approach on September 21, 2023, continually pressing for appropriate regulatory action concerning life insurance underwriting practices.
This development is an important sign of regulatory bodies adapting to the rapidly evolving use of AI in various sectors, including the insurance industry. As these predictive models become more prevalent, the adequacy and effectiveness of protective regulation will be a significant factor in preventing misuse and maintaining fairness.
For more specific details about the new proposal, you may review the original article here.