The Michigan Department of Insurance and Financial Services (DIFS) released a bulletin this month addressing the increasing use of artificial intelligence in the insurance industry. The bulletin explains DIFS’s expectations and outlines insurers’ responsibilities as they adopt these new technologies, said DIFS Director Anita Fox.
The August 7 bulletin states that insurers must comply with all applicable insurance laws and regulations when making decisions and taking actions supported by advanced analytical and computer technologies.
The bulletin provides background information on the potential uses of AI in the industry and outlines regulatory expectations and supervisory considerations based on existing federal and state laws.
The bulletin also provides guidelines for AI systems that insurers should follow. An insurer’s AI systems program should be designed to mitigate the risk that the insurer’s use of an AI system will result in adverse consequences for consumers, the bulletin says.
According to DIFS, the goal of the bulletin is not to prescribe specific practices or documentation requirements, but rather to ensure that insurers in the state are aware of the department’s expectations regarding the management and governance of AI systems.
“The use of AI is changing the way many industries work, including insurance. However, it is important that any decisions made by insurers using these systems comply with all applicable federal and state laws and regulations,” Fox said.
DIFS points out that AI can bring unique risks to customers, including potential inaccuracies, unfair discrimination, data compromise, and lack of transparency and explainability.
“Insurers should take measures to minimise these risks,” the bulletin says.
DIFS cites the National Association of Insurance Commissioners’ Principles of artificial intelligence as a suitable source of guidance for insurers in the development and use of AI systems. The bulletin describes the Ministry’s legislative authority
Topics
InsurTech Data-Driven Artificial Intelligence Michigan Market
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