Artificial Intelligence Use in Insurance

With artificial intelligence (AI) playing an increasingly important role in the insurance industry, the Connecticut Insurance Department is actively engaging with insurers and other stakeholders to protect consumers and ensure the use of AI and Big Data is not discriminatory in any way.

“The Insurance Department is diligently reviewing insurer practices to protect consumers from possible misuse and discrimination,” said Commissioner Andrew Mais. “There is a great deal of work to do, but the agency will stay at the forefront to ensure consumer protection as AI use evolves.”

The Department’s work is based on guidelines for the use of AI established by the National Association of Insurance Commissioners (NAIC) in 2020. NAIC members including Connecticut unanimously adopted these guiding principles on artificial intelligence (AI) to provide a framework for regulators to employ when assessing AI use in the insurance industry, as well as to communicate regulator expectations to businesses, professionals, and stakeholders across the insurance industry as they implement AI tools to facilitate operations.

Under these principles, AI use in insurance is expected to be:

• Fair and Ethical: respecting the rule of law and implementing trustworthy solutions.
• Accountable: with responsibility for the creation, implementation and impacts of any AI system.
• Compliant: with knowledge and resources in place to comply with all applicable insurance laws and regulations.
• Transparent: with a commitment to responsible disclosures regarding AI systems to relevant stakeholders as well as ability to inquire about and review AI driven insurance decisions.
• Secure/Safe/Robust: ensuring a reasonable level of traceability of datasets, processes and decisions made and implementation of a systematic risk management process to detect and correct risks associated with privacy, digital security, and unfair discrimination.

As part of the “fair and ethical” tenet, industry is expected to take proactive steps to avoid proxy discrimination against protected classes when using AI platforms.

The Connecticut Insurance Department is engaged with domestic insurers during scheduled annual meetings and supervisory colleges on their AI models and the logic being used in pricing and underwriting. This includes detailed scrutiny of an insurer’s usage of AI and its effects.

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