To: All Insurers Licensed To Do Business In Oklahoma (“Insurers”)
What: Use of AI in Insurance
From: Glen Mulready, Insurance Commissioner
Date: Nov 14, 2024
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The Commission of Insurance issued Bulletin No. 2024-11 reminding Insurers to comply with state laws and regulations as it relates to use of AI in their business. This includes anti-discrimination and unfair trade practice laws.
The Principles of Artificial Intelligence, adopted by NAIC in 2020, is recognized as the appropriate guidance for Insurers in using and developing AI in their business. Legislative authority used by the Department of Insurance includes:
- Unfair Trade Practices Model Act (#880): The Unfair Practices and Frauds, 36 O.S. §§ 1201, et seq. (UTPA), regulates trade practices in insurance by: 1) defining practices that constitute unfair methods of competition or unfair or deceptive acts and practices; and 2) prohibiting the trade practices so defined or determined.
- Unfair Claims Settlement Practices Model Act (#900): The Unfair Claims Settlement Practices Act, 36 O.S. §§ 1250.1, et seq. (UCSPA), sets forth standards for the investigation and disposition of claims arising under policies or certificates of insurance issued to residents of Oklahoma.
- Corporate Governance Annual Disclosure Model Act (#305): The Corporate Governance Annual Disclosure Act, 36 O.S. §§ 1534, et seq. (CGAD), requires Insurers to report on governance practices and to provide a summary of the Insurer’s corporate governance structure, policies, and The content, form, and filing requirements for CGAD information are set forth in the Corporate Governance Annual Disclosure Model Regulation (#306), OAC 365:25-7-90, et sec. (CGAD-R).
- Property and Casualty Model Rating Law (#1780): The Property and Casualty Competitive Loss Cost Rating Act, 36 O.S. §§ 981–998, requires that property/casualty (P/C) insurance rates not be excessive, inadequate, or unfairly discriminatory when the Oklahoma Insurance Commissioner finds the Oklahoma insurance market is no longer a competitive market. Oklahoma law requires that rates in a competitive market shall not be inadequate or unfairly discriminatory.
- Market Conduct Law: The Market Conduct Law, 36 O.S. §§ 309.1–309.7 & 311.4, establishes the framework pursuant to which the Department conducts market conduct actions. These are comprised of the full range of activities that the Department may initiate to assess and address the market practices of Insurers, beginning with market analysis and extending to targeted examinations. Market conduct actions are separate from, but may result from, individual complaints made by consumers asserting illegal practices by Insurers.
All insurers are expected to implement a written program for AI Systems, a program which mitigates the risks of Adverse Consumer Outcomes, including, at a minimum, the statutory provisions noted above.
