Scope of Incoming Insurance AI Regulation

Understanding the reach of new insurance regulations starts with identifying the technology in question, whether AI, external consumer data sources, or some combination of the two.

Elaine Gibbs, March 13, 2024

Colorado’s Senate signed SB21-169 into law in July 2021, kicking off a wave of regulation related to AI and novel data sources used by consumer-facing insurance companies.

Understanding the scope of these new regulations first starts with identifying the technology in question. To date, the technologies come in three flavors: (1) AI, (2) external consumer data (or, ECDIS), and (3) both AI and external consumer data.

Colorado’s SB21-169 → External consumer data
NAIC Model Bulletin and related state adoption → AI
California’s Bulletin 2022-5 → Both AI and external consumer data
New York’s Proposed Circular Letter → Both AI and external consumer data

We explore regulator definitions in more detail here: AI and external consumer data.

Despite the variations in technology scope, regulators have uniformly zeroed in on use cases that impact or have influence on consumer outcomes. Underwriting and pricing/rating are top concerns, but consumer impact throughout the insurance lifecycle, from product development and marketing to claims handling and fraud detection are often in scope.