AI was one of the NAIC’s top priorities as announced at the Spring Meeting in San Diego last month. First, the Financial Condition [E] Committee received an update on the AI Systems Evaluation Tool Pilot Program from the Big Data and Artificial Intelligence [H] Working Group.
The Evaluation Tool Pilot Program began earlier this month, with participating states reaching out to companies involved in the pilot. States have generally contacted their targeted companies, with some initial outreach still required. During the Working Group meeting, Wisconsin’s Commissioner Houdek noted that generally, states participating in this pilot program have made inquiries to domestic insurers, and state regulators from the participating states hold weekly meetings via telephone or electronic platform to gain and disseminate knowledge about the tool. Each state is expected to contact between 1 and 10 companies for the pilot, with a small number of states involving more than 10 companies.
The Evaluation Tool Pilot Program is being conducted as part of financial examinations, market examinations, and general regulatory inquiries. The Working Group anticipates that responses to the tool will retain confidentiality protections pursuant to the applicable state examination and analysis authority regardless of the method of outreach. In the coming weeks, the Working Group will coordinate feedback from participating states and companies for further revisions to the tool, and the Program administrators hope to work with insurers to ensure they understand the scope of the pilot.
The Working Group also entertained a panel discussion on AI governance trends in the insurance industry which focused on the importance of effective governance in insurance companies, including cross-functional governance and the challenges associated with having people from different functional areas work together. The panel addressed insurer’s dependence on AI vendors and noted that vendors are acknowledging that they need to provide certain levels of information on governance and testing to insurance companies.
The Cyber Security [H] Working Group also heard a presentation on cyber threats and trends within the insurance industry as the growing development and use of AI in the industry has enhanced cybersecurity concerns, while the Innovation, Cybersecurity, and Technology [H] Committee provided an update on the Cybersecurity Event Notification Portal.
Bressler’s Insurance and Health Care Regulatory/Transactional Practice Group continues to monitor these and other developments at the NAIC. Please contact a member of the group with any questions.