The US’s National Association of Insurance Commissioners met in December to progress their work on big data and artificial intelligence in the US insurance market. A lot of the discussion revolved around the design and implementation of an AI regulatory framework.
This work was building upon the NAIC Principles on Artificial Intelligence launched in 2020 (more here). Those principles are interesting in relation to…
· the scope of those ‘AI actors’ – “…insurance companies and all persons or entities facilitating the business of insurance that play an active role in the AI system life cycle, including third parties such as rating, data providers and advisory organizations”.
· the functional scope – “…trade practices, unfair discrimination, access to insurance, underwriting, privacy, consumer protection and eligibility practices, ratemaking standards, advertising decisions, claims practices, and solvency”.
It is interesting to see ‘access to insurance’ mentioned, but surprising to see ‘counter fraud’ omitted. Perhaps the latter is seen as integrated into underwriting and claims, rather as a stand-alone function.
There was a rather historic decision to create a new ‘highest level letter committee’ to focus their work on AI. This will be Committee H and will be only the eight such committee to be created in the association’s 150 year history.
I’ve been keeping an eye on NAIC meetings about big data since early 2015, when it became apparent that model regulations on price optimisation were being drawn up.
What makes the regulation of US insurance markets interesting is ratemaking. The requirement for all rates to be pre-approved before use presents unique challenges for regulators. So while the UK regulator has been making big statements about their Supervisory Technologies, I expect the interesting implementation of SupTech to be in the US market.
What we can be sure of though is that regulators around the world talk to each other and share experiences.