Oklahoma Insurance Commissioner Glen Mulready has released a bulletin offering guidance for insurance companies on the use of artificial intelligence (AI) in their operations.
The bulletin provides regulatory standards and details on the documentation and information the Insurance Department may require during investigations or examinations related to AI implementation.
The guidelines align with those established by the National Association of Insurance Commissioners (NAIC), emphasizing fairness, transparency, accountability, and compliance with state laws aimed at reducing AI-related risks, the Oklahoma Insurance Department stated.
In December 2023, the NAIC introduced a model bulletin, and, since then, 19 states have adopted it. An additional four states have taken similar actions concerning AI regulations in the insurance sector.
Mulready stated that with the introduction of new technologies, there is a responsibility to ensure that Oklahoma's industry innovates while also maintaining consumer protection.
“We hope to see artificial intelligence used to increase efficiencies and improve overall experiences,” he said.
The guidelines make it clear that AI use must adhere to both state and federal laws and regulations. They also stress that AI-driven decisions should not be inaccurate, arbitrary, or result in unfair discrimination.
The Oklahoma Insurance Department has outlined specific expectations for third-party AI systems and data practices. Insurers are advised to include audit rights in contracts with third-party vendors and ensure that these vendors cooperate with regulatory investigations into AI use.
Additional sections of the bulletin focus on risk management and internal controls, including the importance of validating and testing AI system outputs. Insurers are expected to assess the suitability of the data used to train, validate, and audit AI models.
Efforts to obtain further comment from the insurance commissioner’s office were unsuccessful, the report said.
The cyber insurance industry has been experiencing robust growth. Research from S&P reveals that the market hit about $12 billion in 2022, and it was projected to grow by 25% to 30% annually, reaching around $23 billion by 2025.
Edin Imsirovic, director at AM Best, recently noted that AI developments in insurance are focused on converting unstructured data into structured formats that can be used across different areas of the industry.
As the insurance industry explores AI integration, do you think these new regulations will improve consumer protection and industry practices? Share your thoughts in the comments.
