Insurance AI Regulation Insights from the NAIC Summer Meeting 2023

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On August 13, 2023, insurance officials converged in Seattle, Washington, for the NAIC Summer Meeting, focusing on overseeing and guiding the insurance sector’s AI adoption. Spearheaded by the NAIC Innovation, Cybersecurity, and Technology (H) Committee and the State of Colorado, these leaders aim to create robust AI guidelines for insurers.

Colorado’s Insurance Commissioner, Mike Conway, enlightened attendees at a breakfast briefing, backed by the American InsurTech Council. He outlined Colorado SB 169 rulemaking (the CO Proposed AI Regulation) and mentioned the NAIC’s preliminary bulletin regarding insurers’ AI usage (NAIC Draft AI Bulletin). Conway emphasized that the CO Proposed AI Regulation would be broad, covering every insurance category and introducing a mandatory testing phase. He commended the life insurance sector for its collaboration. He also recounted recent engagements with tech giants Google and Microsoft to gain deeper insights into AI’s role in insurance. Conway expressed satisfaction with the direction of the NAIC Draft AI Bulletin and shared Colorado’s commitment to preventing AI-biased discrimination. Addressing confidentiality concerns, he hinted at leveraging market conduct exam authority for added data protection. However, he anticipates a six-month delay before rolling out the new rules, citing other pressing state concerns like wildfires.

Post the InsurTech meeting, Conway joined the NAIC Big Data and Artificial Intelligence (H) Working Group, chaired by Rhode Island’s Elizabeth Kelleher Dwyer. Deloitte presented a detailed analysis of generative AI, followed by revealing statistics from a 10-state AI/ML survey. The figures showed:

  • 70% of homeowners insurers are exploring AI.
  • 88% of auto insurers expressed similar intent. Specifically:
  • 54% employ AI in claims.
  • 47% for underwriting and marketing.
  • 42% in fraud detection.
  • 35% for rating.
  • 14% for loss prevention.

Later, the NAIC Innovation, Cybersecurity, and Technology (H) Committee, led by Maryland’s Kathleen Birrane, assembled. She highlighted 22 states collaborating on the NAIC Draft AI Bulletin, emphasizing it as guidance, not law. Feedback from industry and consumer groups was diverse, covering topics from confidentiality to testing requirements. Written feedback on the NAIC Draft AI Bulletin will be open until September 5, 2023.

Furthermore, Colorado plans a virtual hearing concerning the CO Proposed AI Regulation on August 31, 2023.

On August 15, 2023, the Center for Insurance Policy and Research (CIPR) hosted a “Responsible AI/Big Data” discussion. Panelists recognized the knowledge gap between industry and regulators on AI and ML. The need for regulator education in AI, data, and analytics was underscored, with organizations like the Society of Actuaries offering training programs. The main hurdle in accessing such programs was identified as time constraints.

In summary, as the insurance sector rapidly integrates AI, regulators are striving to ensure consumer protection while promoting technological advancement.


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The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. The content presented is not intended to be a substitute for professional legal, tax, or financial advice, nor should it be relied upon as such. Readers are encouraged to consult with their own attorney, CPA, and tax advisors to obtain specific guidance and advice tailored to their individual circumstances. No responsibility is assumed for any inaccuracies or errors in the information contained herein, and John Montague and Montague Law expressly disclaim any liability for any actions taken or not taken based on the information provided in this article.

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