June 7, 2023

Volume XIII, Number 158


June 06, 2023

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June 04, 2023

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Colorado Insurance Regulators Take Aim at Algorithms

The Colorado Division of Insurance (DOI) is proposing new regulations to protect consumers from potential disparate treatment that may occur due to the use of life-insurance algorithms.

State regulators are pushing back against U.S. life insurers who rely on algorithms and predictive models to speed up life insurance applications. Regulators note that the proposed measures are to safeguard consumers from unfair discrimination that could arise from automated underwriting.

Colorado's framework mirrors other insurance industry efforts to regulate artificial intelligence (AI) and related technologies. These efforts include:

  • Documenting governing principles aimed at transparency and accountability.

  • Board of directors and senior management’s responsibility and accountability for strategy and use of external consumer data and information sources (ECDIS) and the algorithms and predictive models using ECDIS.

  • Establishing written policies and processes for design, development, testing, deployment, use, and ongoing monitoring.

  • Maintaining a process for addressing consumer complaints and inquiries, one that provides sufficiently clear information to enable consumers to take meaningful action in response to adverse decisions.

States like Connecticut have championed similar legislation to put up guardrails on the use of algorithms.

Industry experts anticipate that insurers’ use of algorithms and automated decision-making tools could lead to an increase in potential class-action lawsuits alleging unlawful discrimination.

©2023 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XIII, Number 83

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Fred E. Karlinsky insurance lawyer Greenberg Traurig

Fred E. Karlinsky is Co-Chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group. Fred has more than 25 years of experience representing the interests of insurers, reinsurers and a wide variety of other insurance-related entities on their regulatory, transactional, corporate and governmental affairs matters. Fred is a recognized authority on national insurance regulatory and compliance issues and has taken a leadership position in many insurance trade organizations, has led many industry-driven legislative and regulatory initiatives, and is a sought after thought...

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