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(Article from Insurance Law Alert, October 2020)

For more information, please visit the Insurance Law Alert Resource Center.

In August 2020, the National Association of Insurance Commissioners unanimously adopted guiding principles on the use of artificial intelligence (“AI”).  The guidelines, which are “aspirational guideposts” rather than binding regulations, emphasize the importance of accountability, compliance and transparency in the use of AI in insurance operations.  One significant goal in enacting the principles is to avoid “proxy discrimination against protected classes” when using AI platforms within the insurance industry.  The principles also address concerns about consumer privacy and digital security.

The use of AI technology in the insurance sector is still relatively new, and these general guideposts may ultimately be the first step in the future of AI regulation.  Next steps may involve reporting or certification requirements for insurance companies, similar to regulations imposed in the cybersecurity context last year.  See March 2019 Alert.  For now, an NAIC Executive Committee member notes that insurers “should be responsible for the creation, implementation and impacts of any AI system, even if the impacts are unintended.”