NAIC Adopts Principles for Artificial Intelligence

Faegre Drinker Biddle & Reath LLP

On August 14, the National Association of Insurance Commissioners (NAIC) adopted principles for artificial intelligence that were developed over the last year by the NAIC’s Artificial Intelligence Working Group.

Among other things, the principles require that insurers and others using AI:

  • Take proactive steps to avoid proxy discrimination against protected classes. (As NAIC President Ray Farmer (S.C.) noted, this is part of the NAIC’s broader effort to address racial equality issues.)
  • Monitor the operation of its AI system and remediate harmful, unintended consequences.
  • Provide responsible disclosures and give consumers an opportunity to inquire about and seek review of AI-driven decisions.
  • Take a risk management approach to each phase of the AI system's life cycle.

The principles do not have the effect of law, but they set out the regulators’ expectations and will form the basis for future regulatory workstreams.

If your organization is using AI, it’s time to consider how your systems measure up to the regulators’ expectations. Our lawyers and data scientists stand ready to assist in that effort.

In the meantime, be sure to catch our AI discussion with North Dakota Insurance Commissioner Jon Godfread on Tuesday, September 1. Commissioner Godfread chairs the NAIC’s Innovation and Technology Task Force and Artificial Intelligence Working Group.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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