On February 1, 2024, Alaska made history by becoming the first state to adopt the National Association of Insurance Commissioners (NAIC) Model Bulletin on Artificial Intelligence (AI) Systems in Insurance through the issuance of Bulletin B 24-01. This landmark Bulletin is now in effect and encompasses all insurers authorized to operate in Alaska. The Alaska Division of Insurance (AK DOI) has emphasized the importance of ensuring that consumer-related decisions or actions taken with the aid of advanced analytical and computational technologies, including AI systems, adhere to both federal and state regulations, particularly those concerning unfair and deceptive trade practices.
Bulletin B 24-01 outlines the AK DOI’s expectations, signaling to insurers that their use of AI will be scrutinized during market conduct examinations and investigations, which will seek detailed information and documentation on AI utilization. The Bulletin underscores the necessity for insurers to ensure that AI-driven decisions are neither inaccurate, arbitrary, capricious, nor unjustly discriminatory.
The guidance provided within Bulletin B 24-01 covers several critical areas, including:
- Establishing a comprehensive governance framework.
- Implementing controls to prevent adverse outcomes for consumers.
- Developing and maintaining written policies and procedures for AI System (AIS) programs.
- Instituting robust risk management controls.
- Conducting internal audits and testing.
- Regular reporting to the insurer’s board of directors.
- Managing third-party vendors and ensuring their accountability.
Although Bulletin B 24-01 offers a thorough guide for insurers on the responsible use of AI systems, it does not carry the same legal weight as a law or regulation. However, the AK DOI is keen on fostering technological innovation and the prudent application of AI in the insurance sector, acknowledging the diversity in insurers’ operational models and needs. While Bulletin B 24-01 refrains from setting specific documentation or AI practice standards, it clarifies that the AK DOI will regulate the use of AI systems within the framework of existing legal provisions, ensuring a balanced approach to innovation and consumer protection.