Link: https://theactuarymagazine.org/big-data-big-discussions/
Excerpt:
Why is the insurance industry now facing increased scrutiny on certain underwriting methods?
Insurers increasingly are turning to nontraditional data sets, sources and scores. The methods used to obtain traditional data—that were at one time costly and time-consuming—can now be done quickly and cheaply.
As insurers continue to innovate their underwriting techniques, increased scrutiny should be expected. It is not unreasonable for consumer advocates to push for increased transparency and explainability when insurers employ these advanced methods.
What is the latest regulatory activity on this topic in the various states and at the NAIC?
Activity in the states has been minimal. In 2021, Colorado became the first (and so far, only) state to enact legislation requiring insurers to test their algorithms for bias. Legislation nearly identical to the Colorado law was introduced in Oklahoma and Rhode Island in 2022, and it is likely other states will consider similar legislation. Connecticut is finalizing guidance that would require insurers to attest that their use of data is nondiscriminatory. Other states have targeted specific factors, but most have adopted a wait-and-see approach.
The NAIC created a new high-level committee to focus on innovation and AI, but it has become clear that a national standard is not likely at this time.
Author(s): INTERVIEW BY STEPHEN ABROKWAH, Interview with Neil Sprackling, president of Swiss Re Life & Health America Inc.
Publication Date: March 2022
Publication Site: The Actuary