The Innovation, Cybersecurity, and Technology (H) Committee of the National Association of Insurance Commissioners (NAIC) has recently released its exposure draft detailing the NAIC’s model bulletin concerning insurer’s use of algorithms, predictive models, and artificial intelligence systems. This significant development came into light on July 17.
As suggested by the committee, the draft model bulletin adopts a principles-based approach when it comes to how insurers should manage the development, acquisition, and deployment of artificial intelligence and big data-related resources, commonly referred to as AI systems, in decision making or providing support. The committee is an entity of the NAIC, an association that draws regulators from all across the United States.
The exposure draft released is expected to make a considerable impact on the insurers’ use of AI systems. The ramifications of these principles-based approach could lead to significant changes in the insurance realm, especially when considering the increasingly dominant role of AI and predictive models in the sector. Further details about the draft can be found on the JD Supra website.
While the principles-based approach offers considerable freedom for the insurers, it demands a sufficient level of responsibility and accountability. It is expected to guide insurers on how to proficiently and ethically incorporate AI systems into their operations while ensuring compliance with existing regulations.
The insurance industry awaits further updates on this front as the draft bulletin is reviewed, and any resulting regulations could alter the landscape of the industry’s modern practices. Therefore, legal professionals and insurers are encouraged to review the exposure draft carefully and consider potential impacts on their respective organizations.