On September 21, 2023, the Colorado Division of Insurance set a new precedent by adopting a Finale Regulation implementing S.B. 21-169. This 2021 law is particularly significant as it’s specifically tailored towards the governing of Colorado-licensed insurers’ use of external consumer data and information sources (ECDIS), along with algorithms and predictive models which make use of ECDIS (Models).
The implementation of this new regulation represents the first in a potential series of legal changes aimed at the insurance sector’s advancing use of artificial intelligence and large-scale data analysis tools.
As the growing prevalence of such technologies transforms the industry’s approach to risk management and policy pricing, regulators and industry insiders alike are keenly attentive to the legal complications and ethical dilemmas these changes can potentially provoke.
Under the auspices of this new regulation, insurers are required to obey certain stringent rules and conduct periodic audits on their use of ECDIS and Models. These regulations also demand increased transparency with consumers, ensuring they are made aware of when and how their data is being used.
Colorado’s step is likely to prompt reflection among other states’ insurance regulators, potentially marking a turning point in the way AI and data analysis are viewed and managed throughout the industry.
Given the complex legal landscape that these new technologies present, industry professionals, both legal and otherwise, are advised to monitor these developments closely. For further information regarding Colorado’s recent move, find more detailed information in this report by Bryan Cave Leighton Paisner.