Annuities in Play as Colorado Regulates Life Insurance Data, Attorneys Predict

Two insurance regulatory law specialists say the effort that created the new Colorado life insurance technology unfair discrimination regulation will likely expand to affect annuities.

The Colorado regulation will also do more to affect how insurers operate than other state efforts to address concerns about new forms of decision-support technology, the lawyers predicted.

Paige Waters, a partner at Locke Lord, and Stephanie O’Neill Macro, an attorney of counsel with the firm, talked about the new regulation of external consumer data and information sources, or ECDIS, in an email interview.

What it Means: Colorado’s requirements could have a big effect on how financial services regulators approach artificial intelligence, machine learning, traditional analytical systems and any new forms of technology.

The Regulation: The new rules require insurers to set up a governance system for preventing race-based discrimination involving ECDIS.

Regulators defined ECDIS to include “credit scores, social media habits, locations, purchasing habits, home ownership, educational attainment, licensures, civil judgments, court records, occupation that does not have a direct relationship to mortality, morbidity or longevity risk, consumer-generated internet of things data, and any insurance risk scores derived by the insurer or third-party from the above listed or similar data and/or information source.”

What’s Different: Colorado is the first state to address use of AI and other decision-support technology in insurance through a full-scale regulation, rather than a bulletin, Waters and Macro said.