In an industry where the pace of regulation is often described with references to snails and turtles, the NAIC’s adoption of a model bulletin on carriers’ use of Artificial Intelligence Systems resembles the blur of a bullet train.
At a high level, what regulators rushed to accomplish in crafting the bulletin was to deliver a reminder that laws about unfair trade practices, unfair discrimination, corporate governance disclosure, P/C rating laws and market conduct surveillance laws apply to the use of AI systems as well, and to convey expectations about written documentation regulators expect carriers to produce during regular conduct exams regarding AI governance, risk management and scrutiny of third-party providers of AI systems.
Michael (Fitz) Fitzgerald, Insurance Industry Advisor for SAS Institute Inc., served as guest editor for this article and others featured in CM's Q1-2024 magazine, "Leading the AI-Powered Insurer."
Executive SummaryBruce Baty, a lawyer with nearly 40 years of experience assisting insurers in regulatory matters, gave an overview of a model bulletin adopted by the NAIC late last year, setting forth regulators’ expectations about how carriers will govern the development, use and acquisition of AI technologies.
At a high level, what regulators rushed to accomplish in crafting the bulletin was to deliver a reminder that laws about unfair trade practices, unfair discrimination, corporate governance disclosure, P/C rating laws and market conduct surveillance laws apply to the use of AI systems as well, and to convey expectations about written documentation regulators expect carriers to produce during regular conduct exams regarding AI governance, risk management and scrutiny of third-party providers of AI systems.
Michael (Fitz) Fitzgerald, Insurance Industry Advisor for SAS Institute Inc., served as guest editor for this article and others featured in CM’s Q1-2024 magazine, “Leading the AI-Powered Insurer.“
“This was overnight, comparatively speaking,” Bruce Baty, a partner with the law firm Norton Rose Fulbright U.S. LLP, said during a January interview with Carrier Management Guest Editor Michael (Fitz) Fitzgerald, describing the development and adoption of a “Model Bulletin on the Use of Algorithms, Predictive Models, and Artificial Intelligence (AI) Systems by Insurers” by the National Association of Insurance Commissioners.