The ethical use of AI: A summary of Colorado’s draft AI regulation for insurance companies has been saved
The ethical use of AI: A summary of Colorado’s draft AI regulation for insurance companies
The Colorado Division of Insurance (CDOI) recently released a draft artificial intelligence (AI) regulation aimed at establishing requirements for life insurance companies’ internal governance and risk management framework to ensure that their use of external consumer data and AI models do not result in unfair discriminatory insurance practices. This is believed to be the first such regulation targeting insurers, specifically life insurance. Based on recent regulatory trends, other states may follow suit, and the scope may increase to other types of insurance.
- CDOI draft AI regulation requirements
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CDOI draft AI regulation requirements
The table below outlines the specific requirements in the draft regulation. More detailed information about each can be found in the full report.
Once finalized and put into effect, the Colorado Department of Insurance’s AI regulation will likely provide specific enforceable requirements for life insurance companies using ECDIS and AI models using ECDIS in Colorado. CDOI has leveraged high-level principles, found in places like the federal regulatory guidelines, and attempted to turn them into reporting requirements for governance, documentation, and reporting. While it is expected to apply only to life insurance companies doing business in Colorado, the draft regulation may set the tone for industry leading practices and other regulators looking to implement similar requirements. Additionally, CDOI has also suggested that similar rules may be applied to other insurance lines or other AI or algorithmic uses.
As we wait for the final regulation to be issued, below are three steps that can help life insurance companies prepare to adhere to the regulatory requirements.
- Assess AI usage by taking an inventory of use cases, purpose, and governance processes.
- Create an AI governance plan with defined compliance goals, timelines, and required resources.
- Train employees to understand the new regulations, and identify necessary policy/procedure changes for ECDIS and AI models.
Deloitte can help
Deloitte’s Trustworthy AI™ Framework and AI Governance & Risk services help provide strategic and tactical solutions to enable organizations to continue to build and use AI-powered systems while promoting trustworthy AI.
This framework is in line with CDOI’s draft AI regulation. It is designed to assist insurance companies in operationalizing automated systems safely and effectively while protecting individuals and communities and adhering to emerging regulations, such as those provided by CDOI.
More information about Deloitte’s Trustworthy AI Framework can be found here.
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