Some players want new state insurance guidelines on artificial intelligence to fit like a billowy wool kaftan, and others want them to fit like a tight steel belt.
The wool versus steel fight is showing up in comments on a new model bulletin being drafted by the National Association of Insurance Commissioners' Innovation Cybersecurity and Technology Committee.
The committee posted a second draft of the bulletin model last week on its section of the NAIC website. Comments on the new draft are due Nov. 6.
Scott Kosnoff, an insurance law specialist at Faegre Drinker, said in an email interview that the NAIC's AI regulatory effort covers much of the same ground as Colorado's new regulation banning uses of "external consumer data and information sources" that lead to race-based discrimination.
But "Colorado's statute takes a prescriptive approach," Kosnoff said. "The NAIC bulletin lays out regulatory expectations, rather than requirements."
What it means: Many of the fights over how life and annuity issuers' AIs and robots behave may start out looking like battles over how loose and flexible the rules should be, rather than what the goals of the rules should be.
All players seem to agree that, in principle, life and annuity issuers should not use AI or other new technologies to discriminate in an unfair way.
The nuts and bolts: Federal law leaves regulation of the business of insurance to the states. The NAIC, a group for state insurance regulators, can set voluntary guidelines but cannot normally impose rules on its own.
The new model bulletin draft is a revision of an earlier version the Innovation Committee posted in July and included in a meeting packet circulated in August.
The bulletin is part of a long-running conversation among regulators, insurers, insurance groups and consumer groups about insurers' efforts to use new kinds of data and data analysis in the marketing, underwriting, pricing and administration of life and annuity products.
In 2019, for example, New York sent out a letter warning insurers to be prepared to show that any analytical strategies they use in new accelerated life insurance underwriting programs are reasonable, fair and transparent.
