Best Practices For Utilizing AI/ML Tools As NAIC Adopts The Model Bulletin On Use Of AI

What You Need To Know

• In December 2023, the National Association of Insurance Commissioners (NAIC) adopted the Model Bulletin on the use of Artificial Intelligence Systems by Insurers.
• The Model Bulletin urges insurers to mitigate AI-related risks, such as discrimination, data vulnerability and lack of transparency. This guidance aims to ensure responsible AI usage and prevent adverse consumer outcomes in the industry.
• While its primary focus is on insurance companies, insurance intermediaries should also pay attention to potential regulations.
• Insurance entities should develop internal policies and document AI use to mitigate legal exposure in an evolving regulatory landscape. Best practices for utilizing AI/ML tools in the insurance industry include disclosure, explanation, compliance and oversight and documentation.