Insurance Regulators Wrestle With AI Supervision

State insurance regulators have drafted rules for how insurers use artificial intelligence.

The Innovation Cybersecurity and Technology Committee, an arm of the National Association of Insurance Commissioners, posted a draft AI model bulletin on the NAIC’s website Monday.

The committee says that insurers must take responsibility for the actions of their own AI-based systems and that they also must monitor their vendors’ AI systems.

When an insurer is working with an outside organization that has developed or deployed an AI system that affects consumers, the insurer must show how it verifies that the systems “are designed to meet the legal standards imposed on the insurer itself,” according to the draft model.

What It Means

State regulators hope insurers can keep AI systems from making unfair and possibly discriminatory decisions about insurance.

The NAIC

The U.S. federal government leaves most regulation of insurance to the states.

The NAIC is a Kansas City, Missouri-based group for state insurance regulators. It does not directly set state laws or regulations, but states often start with NAIC models when developing their own rules.