The country’s insurance regulators are vowing to prioritize the monitoring of the use of consumer and non-consumer data by companies, the use of artificial intelligence, and the availability and affordability of insurance products for racial minorities.

They say they will also remain active responding to the ongoing coronavirus pandemic and its impact on consumers and insurance markets.

The state regulators’ organization, the National Association of Insurance Commissioners (NAIC), celebrating its 150th anniversary, announced its strategic priorities for 2021.

“This year marks 150 years of NAIC members being unified in their commitment to protect consumers and ensure fair, competitive, and healthy markets,” said NAIC President and Florida Insurance Commissioner David Altmaier. “In 2021, we will continue this tradition and find ways to advance solutions that help foster a robust and responsive insurance sector that provides consumers with safe and reliable insurance products.”

The NAIC 2021 priorities and the charges to its key committees are (in no specific order):

  • COVID-19 — In 2021, the NAIC will continue its “Priority One” initiative designed to support state insurance departments in their response to the ongoing pandemic and its impact on consumers and insurance markets. NAIC has a COVID resource page that includes information on actions taken by individual states in response to the COVID 19 pandemic that impact various lines of insurance. NAIC said insurance regulators will continue to analyze data and develop the tools so that consumer protection keeps pace with changes brought on by the virus.
  • Big Data/Artificial Intelligence — The Big Data and Artificial Intelligence Working Group is chaired by Doug Ommen, Iowa, joined by Elizabeth Kelleher Dwyer, co-vice chair, Rhode Island and Mark Afable, co-vice chair, Wisconsin.

For 2021 this group plans to research the use of big data and artificial intelligence (AI) in the business of insurance and evaluate existing regulatory frameworks for overseeing their use. The result could produce model governance for the use of big data and AI for the insurance industry.

Plans also call for the group to review current audit and certification programs that could be used to oversee insurers’ use of consumer and non-insurance data and models using intelligent algorithms, including AI. If appropriate, the panel would recommend modifications to model laws and regulations regarding marketing, rating, underwriting and claims, regulation of data vendors and brokers, regulatory reporting requirements, and consumer disclosure requirements.

Third, the 2021 agenda addresses a charge to assess what data and tools state insurance regulators need to appropriately evaluate the use of big data and intelligent algorithms, including AI in underwriting, rating, claims and marketing practices.

  • Climate Risk & Resiliency — The Climate and Resiliency Task Force is led by Ricardo Lara, co-chair California; Raymond G. Farmer, co-chair, South Carolina; Colin M. Hayashida, co-vice chair, Hawaii; James J. Donelon, co-vice chair, Louisiana; Kathleen A. Birrane, co-vice chair, Maryland; Bruce R. Ramge, co-vice chair, Nebraska; and Andrew R. Stolfi, co-vice chair, Oregon. The task force’s mission is to serve as the coordinating NAIC body for discussion and engagement on climate-related risk and resiliency issues.

For 2021, this task force’s agenda includes considerations of: climate risk disclosures within the insurance sector, including an evaluation of the NAIC’s Climate Risk Disclosure Survey; the use of modeling by carriers and reinsurers concerning climate risk; how rating agencies incorporate climate risk into their analysis and governance; the potential solvency impact of insurers’ exposures, including both underwriting and investments, to climate-related risks; climate risk-related disclosure, stress-testing, and scenario modeling; how to apply technology and innovation to the mitigation of storm, wildfire, other climate risks and earthquake; insurance product innovation directed at mitigating climate risk and closing protection gaps; and pre-disaster mitigation and resiliency and the role of state insurance regulators in resiliency.

  • Race & Insurance — The Special Committee on Race and Insurance is co-chaired by Maine Superintendent Eric Cioppa and New York Executive Deputy Superintendent of Insurance My Chi To.

The 2021 agenda for this panel calls for research into the level of diversity and inclusion within the insurance sector; engagement with a broad group of stakeholders on issues related to race, diversity and inclusion in, and access to, the insurance sector and insurance products; and an examination of current practices or barriers in the insurance sector that potentially disadvantage people of color and historically underrepresented groups.

The goal is to make recommendations by year-end regarding steps that both state insurance regulators and the insurance industry can take to increase diversity and inclusion within the sector; that should be taken to address practices that potentially disadvantage people of color and/or historically underrepresented groups; and to ensure ongoing engagement of the NAIC on these issues.

  • Consumer Data Privacy — The Privacy Protections Working Group is headed by Cynthia Amann, chair, Missouri, joined by Ron Kreiter, vice chair, Oklahoma.

This group’s 2021 plan calls for it to review state insurance privacy protections regarding the collection, use and disclosure of information gathered in connection with insurance transactions, and make recommended changes, as needed, to certain NAIC models, such as the NAIC Insurance Information and Privacy Protection Model Act (#670) and the Privacy of Consumer Financial and Health Information Regulation (#672).

  • Long-Term Care Insurance (LTCI) — The Long-Term Care Insurance Task Force is headed by Scott A. White, chair Virginia, joined by Michael Conway, vice chair, Colorado. For 2021 this panel’s charges include “recognizing the gravity of the threat posed by the current long-term care insurance (LTCI) environment both to consumers and our state-based system of insurance regulation.”

To respond to what the NAIC sees as the threat, the committee vows to develop a consistent national approach for reviewing LTCI rates that results in actuarially appropriate increases being granted by the states in a timely manner and eliminates cross-state rate subsidization. It will further recommend options to provide consumers with choices regarding modifications to LTCI contract benefits where policies are no longer affordable due to rate increases and will deliver such a proposal by the 2021 summer meeting

Source: NAIC

*This story appeared previously in our sister publication Insurance Journal.