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The Big Data and Artificial Intelligence Working Group of the National Association of Insurance Commissioners (NAIC) is developing an artificial intelligence (AI) evaluation tool for use by state insurance regulators. The NAIC represents 33 independent U.S. insurance organizations. The purpose of the tool is to gauge the extent to which insurance companies rely on AI systems and how well they monitor their use. NAIC intends for state regulators to use the tool to identify and assess the financial and consumer risks posed by AI systems.
The current draft of the tool includes a chart measuring an insurer's use of an AI system to manage certain tasks. Other information that the tool would collect includes:
- Control of an insurer's AI governance framework;
- Testing methods for insurer AI systems;
- Involvement of the insurer's board with AI usage; and
- How insurers effectively manage an AI system that may harm consumers.
Blue Cross and Blue Shield Association recently commented on the draft version of the NAIC tool. In its comments, Blue Cross is pushing for narrower oversight of AI systems to avoid running afoul of its AI vendor confidentiality agreements. For instance, the tool currently provides a space for regulators to list an AI system's "Third Party Data Source/Vendor Name." Blue Cross wants to make the provision of this information optional for insurance companies, arguing that disclosing it may conflict with confidentiality and nondisclosure agreements they have with vendors, leading to contract breaches.
Likewise, the current draft of the tool requires insurance companies to discuss whether any other party has taken action against them for using AI systems. Blue Cross wants to limit the information provided to formal legal or regulatory actions "to the extent permitted by law." Otherwise, Blue Cross says that it would have to disclose actions that federal or state law deems confidential or restricted from disclosure.
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