Climate, AI, Privacy, Racial Bias Among State Insurance Regulators’ 2021 Priorities

Climate, AI, Privacy, Racial Bias Among State Insurance Regulators’ 2021 Priorities

2021-02-10 14:40:33
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The country's insurance regulators pledge to prioritize oversight of companies' use of consumer and non-consumer data, the use of artificial intelligence, and the availability and affordability of insurance products for racial minorities.

They say they will also continue to actively respond to the ongoing coronavirus pandemic and its impact on consumer and insurance markets.

The organization of the national regulators, the National Association of Insurance Commissioners (NAIC), which is celebrating its 150th anniversary, has announced its strategic priorities for 2021.

"This year marks 150 years since NAIC members are united in their commitment to protecting consumers and ensuring fair, competitive and healthy markets," said David Altmaier, NAIC Chairman and Florida Insurance Commissioner. "In 2021, we will continue this tradition and find ways to develop solutions that contribute to a robust and responsive insurance industry that provides consumers with safe and reliable insurance products."

The NAIC 2021 priorities and costs for the major commissions are (in no particular order):

COVID-19 – In 2021, the NAIC will continue its "Priority One" initiative designed to support the state's insurance departments in their response to the ongoing pandemic and its impact on consumer and insurance markets. NAIC has a COVID resource page that provides information on actions taken by individual states in response to the COVID 19 pandemic affecting several lines of insurance. NAIC said insurance regulators will continue to analyze data and develop the tools so that consumer protection keeps pace with the changes brought about by the virus.

Big data / artificial intelligence The Big Data and Artificial Intelligence Working Group is chaired by Doug Ommen, Iowa, accompanied by Elizabeth Kelleher Dwyer, Co-Vice Chair, Rhode Island, and Mark Afable, Co-Vice Chair, Wisconsin.

By 2021, this group plans to explore the use of big data and artificial intelligence (AI) in the insurance industry and review existing regulatory frameworks for monitoring their use. The result could provide model management for the use of big data and AI for the insurance industry.

Plans also prompt the group to review current audit and certification programs that can be used to monitor insurers' use of consumer and non-insurance data and models using intelligent algorithms, including AI. If applicable, the panel would recommend changes to the model law and regulation related to marketing, rating, underwriting and claims, regulation of data sellers and brokers, legal reporting requirements and consumer disclosure requirements.

Third, the 2021 agenda addresses a charge to assess what data and tools state insurance regulators need to properly evaluate the use of big data and intelligent algorithms, including AI in underwriting, rating, claims, and marketing practices.

Climate risk and resilience – The Climate and Resilience Task Force is led by Ricardo Lara, California Co-Chair; Raymond G. Farmer, Co-Chair, South Carolina; Colin M. Hayashida, Co-Chairman, Hawaii; James J. Donelon, Co-Chairman, Louisiana; Kathleen A. Birrane, co-chair, Maryland; Bruce R. Ramge, Co-Chairman, Nebraska; and Andrew R. Stolfi, Co-Vice Chairman, Oregon. The task force's mission is to serve as the NAIC's coordinating body for discussion and engagement with climate-related risks and resilience.

For 2021, this task force's agenda includes considerations on: disclosure of climate risks within the insurance industry, including a review of the NAIC's climate risk disclosure survey; the use of models by carriers and reinsurers with regard to climate risks; how rating agencies integrate climate risk into their analysis and governance; the potential solvency effect of insurers' exposures, including both underwriting and investments, to climate risks; climate risk-related disclosure, stress testing and scenario modeling; how technology and innovation can be applied to mitigate storms, wildfires, other climate risks and earthquakes; innovation of insurance products aimed at reducing climate risks and closing gaps in protection; and mitigation and resilience to disasters and the role of regulators in national insurance in resilience.

Race & insurance – The Special Committee on Breeds and Insurance is co-chaired by Chief Superintendent of Maine, Eric Cioppa, and Deputy Superintendent of Insurance My Chi To in New York.

The 2021 agenda for this panel calls for research into the degree of diversity and inclusion within the insurance industry; involvement with a wide range of stakeholders on issues related to race, diversity and inclusion in and access to the insurance industry and insurance products; and an examination of current practices or barriers in the insurance industry that may disadvantage people of color and historically underrepresented groups.

The goal is to make recommendations by the end of the year regarding steps that both state insurance regulators and insurance industry regulators can take to increase diversity and inclusion within the industry; to be taken to address practices that may disadvantage people of color and / or historically under-represented groups; and to ensure the continued involvement of the NAIC in these matters.

Privacy of consumer data – The Privacy Protection Working Group is led by Cynthia Amann, Chair, Missouri, accompanied by Ron Kreiter, Vice Chair, Oklahoma.

This group's 2021 plan calls for a review of state insurance privacy protections with regard to the collection, use and disclosure of information collected in connection with insurance transactions, and to make recommended changes to certain NAICs as needed. models, such as the NAIC Insurance Information and Privacy Protection Model Act (# 670) and the Privacy of Consumer Financial and Health Information Regulation (# 672).

Long-term health insurance (LTCI) – The Long-Term Care Task Force is led by Scott A. White, Virginia Chairman, accompanied by Michael Conway, Vice Chairman, Colorado. The costs of this panel for 2021 include "recognizing the seriousness of the threat posed by current long-term care insurance (LTCI) to both consumers and our state-based insurance regulation system."

To respond to what the NAIC sees as the threat, the committee pledges to develop a consistent national approach to reviewing LTCI rates that leads states to act actuarially appropriate increases in a timely manner and eliminates cross-sectional rate subsidies. It will further recommend options to provide consumers with choices regarding changes to LTCI contract benefits when policies are no longer affordable due to rate increases and will deliver such a proposal by the 2021 summer meeting

Source: NAIC

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