IRI proposes changes to NAIC model on insurers’ use of AI

• IRI supports NAIC’s consumer protection goals.
• IRI is wary of third-party AI contracts.
• IRI calls for clear standards for predictive models and AI in insurance.

The Insured Retirement Institute (IRI) has suggested that revisions be considered for a proposed framework by the National Association of Insurance Commissioners (NAIC) regarding the utilization of algorithms, predictive models, and artificial intelligence (AI) by insurers.

According to IRI representatives, they are aligned with NAIC’s objective of ensuring that decisions affecting consumers, which are influenced by advanced analytical and computational technologies, adhere to insurance laws and regulations.

However, IRI, in its feedback provided to the NAIC Innovation, Cybersecurity, and Technology (H) Committee, expressed concerns related to the expectations concerning third-party AI systems and contracts involving these external parties.

“Third-party vendors may be unwilling to provide proprietary information regarding their data or models directly to insurance companies, and we believe recognition of this issue within the Bulletin is important,” Sarah Wood, director of state policy and regulatory affairs at IRI, said.

“We believe that there is a difference between predictive models that are trained on defined, labeled data (supervised by humans) and AI technologies that cannot be fully supervised (i.e., ChatGPT) and may or may not lead to a specific outcome,” Wood wrote in the comments. “It would be appropriate to differentiate between these different models and create a standard that is separate for each modeling type. We’d be happy to collaborate further with the Committee on how to address this issue.”

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