The Colorado Division of Insurance coverage final week adopted main laws that may govern life insurers’ use of any “exterior client knowledge and data supply,” or ECDIS.

That definition seems to incorporate conventional knowledge streams and analytical programs in addition to synthetic intelligence-based programs.

What might this imply for all times insurers, purchasers and monetary professionals?

Scott M. Kosnoff, a associate at Faegre Drinker, answered questions concerning the Colorado laws through electronic mail. The solutions have been edited.

THINKADVISOR: How does Colorado’s regulation examine with different jurisdictions?

SCOTT KOSNOFF: Colorado’s statute and regulation make it distinctive on this space.

The Nationwide Affiliation of Insurance coverage Commissioners is engaged on a mannequin bulletin that builds upon the NAIC’s AI rules, which have been adopted in 2020, and lays out regulatory expectations, together with with respect to governance; danger administration and inner controls; and third-party AI programs.

As soon as the NAIC finalizes and adopts the bulletin, particular person states will take into account whether or not they wish to undertake the bulletin and, in that case, whether or not to make any modifications.

The California Division of Insurance coverage issued a bulletin regarding the usage of AI, algorithms, Massive Knowledge and the necessity to keep away from unfair discrimination in opposition to protected courses. It additionally held a workshop inspecting bias and discrimination in September 2022.

The New York Division of Monetary Companies retained an out of doors guide to conduct interviews concerning use of AI and machine studying by life insurers. 

Connecticut issued discover regarding use of Massive Knowledge and avoidance of discriminatory practices and requires a certification from home insurers.

The District of Columbia is investigating potential “unintentional bias,” starting with personal passenger auto, and it performed a knowledge name earlier this yr.

How is Colorado’s strategy completely different from typical states?

Colorado’s statute adopts a definition of unfair discrimination that departs from the way in which the time period traditionally has been understood.

Colorado’s statute focuses on the usage of exterior client knowledge and data sources, and never expressly on AI.

Colorado would require insurers to check for unfair discrimination, undertake a danger administration and governance framework and submit stories to the regulators.

What implications might the Colorado regulation have for merchandise aside from life insurance coverage?