The Michigan Department of Insurance and Financial Services (DIFS) released a bulletin this month addressing the growing use of artificial intelligence in the insurance industry. The bulletin clarifies DIFS’ expectations and outlines the responsibilities that insurers have when they adopt these new technologies, DIFS director Anita Fox said.
The Aug. 7 bulletin states that insurers must comply with all applicable insurance laws and regulations when making decisions and actions supported by advanced analytical and computational technologies.
The bulletin provides background on the ways AI is being used in the industry. It goes on to provide regulatory expectations and oversight considerations based on existing federal and state laws.
The bulletin also offers AI system guidelines for insurers to follow. An insurer’s AI system program should be designed to mitigate the risk that the insurer’s use of an AI system will result in adverse consumer outcomes, the bullet says.
DIFS said the goal of the bulletin is not to prescribe specific practices or specific documentation requirements but rather to ensure that insurers in the state are aware of the department’s expectations as to how AI Systems will be governed and managed.
“The use of AI is transforming the way work is done in many industries, including insurance, but it is important that every decision made by insurers using these systems complies with all applicable federal and state laws and regulations,” said Fox.
DIFS cautions that AI can present unique risks to customers including the potential for inaccuracy, unfair discrimination, data vulnerability, and lack of transparency and explainability.
“Insurers should take actions to minimize these risks,” the bulletin reads.
DIFS cites National Association of Insurance Commissioners’ Principles of Artificial Intelligence as an appropriate source of guidance for Insurers as they develop and use AI systems. The bulletin details the department’s legislative authority
Topics InsurTech Data Driven Artificial Intelligence Michigan Market
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