Executive Summary

Is insurance rating becoming too complex and too opaque for state departments to regulate? That's a basic question that seems to hang over deliberations at the NAIC level and feedback from insurance trade groups about regulatory oversight of insurance pricing models increasingly powered by predictive analytics and machine learning. Carrier Management Guest Editor Joseph Harrington gives a summary of current activity on all sides, focusing on debate over insurer models, the use of third-party reviewers, acceptable variables and the prospect of "weblining."

In dystopian fantasies, artificial intelligence and robots take over the world, acting on their own and becoming completely uncontrollable for their human creators.

We’re not there yet, and may never be, but insurance rate regulation offers a glimpse into questions that arise when machines can make complex decisions more quickly than humans can comprehend.

Staff members of the National Association of Insurance Commissioners are currently reviewing responses to draft documents distributed in December 2017 by the NAIC’s Big Data Working Group, a body created to review the rapidly growing use of data analytics in insurance.

The principal parties to the discussions—insurance regulators and the NAIC on one hand; insurers and vendors on the other—are seeking to preserve aspects of traditional deliberation at a time when technology can outrun our capacity to deliberate.

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