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On November 20, 2023, the Division of Insurance coverage of the Colorado Division of Regulatory Companies (“DORA”), printed for a 9 day public remark interval two proposed bulletins which would supply clarifying steerage on the implementation of Colorado Insurance Regulation 10-1-1: Governance of Danger Administration Framework Necessities for Life Insurer’s Use of Exterior Client Knowledge and Data Sources, Algorithms, and Predictive Fashions, which was adopted in September 2023 pursuant to SB21-169. The proposed bulletins specify DORA’s present coverage that the scope of the regulation is restricted at the moment [1] to particular person life insurance policies, thus excluding group life and annuities, in addition to steerage on the type of attestation from corporations testifying that they don’t use any exterior client information and knowledge sources (“ECDIS”) [2] or algorithm [3] or predictive mannequin [4] that makes use of ECDIS. The remark interval closes Wednesday November 29, 2023, at 5:00pm MST. Written feedback are to be submitted to: DORA_INS@[email protected].
Background
In July 2021, Governor Jared Polis signed SB21-169 which prohibits unfair discrimination [5] through using exterior client information. The act requires insurers to develop and preserve a Danger Administration Framework, persevering with governance oversight pertaining to exterior client information, and attestation by an insurer’s chief danger officer. The act duties DORA with adopting guidelines on a enterprise line foundation that implement the act. [6] Pursuant to the act, after a public remark interval, DORA adopted the ultimate life regulation on September 21, 2023, which grew to become efficient November 14, 2023. DORA printed these back-to-back proposed bulletins in response to public inquiries. SB21-169 requires DORA to undertake comparable guidelines pertaining to different enterprise traces; thus, further laws relevant to different enterprise traces, similar to property & casualty, are anticipated within the close to future.
Bulletin No. B-10.001
DORA printed this proposed guidance in response to “inquiries from life insurers requesting steerage concerning the way and format of the attestation required by Colorado Insurance coverage Regulation 10-1-1 when an insurer doesn’t use [ECDIS], or algorithms or predictive fashions that use ECDIS, in any insurance coverage observe.” [7] DORA has not prescribed a selected format for the attestation. Nevertheless, DORA has established two minimal necessities:
- The attestation should be signed by an officer of the insurer; and
- “[U]nambiguously state the insurer doesn’t use any ECDIS, or any algorithm or predictive mannequin that makes use of ECDIS, with any insurance coverage observe.”
The attestation ought to be submitted by e-mail on to Jason Lapham, Director Huge Knowledge and AI Coverage, Division of Insurance coverage, at [email protected].
Bulletin No. B-10.002
DORA printed this proposed guidance in response to “inquiries from life insurers requesting clarification concerning the applicability of Colorado Insurance coverage Regulation 10-1-1 to annuity contracts and group life insurance coverage insurance policies.” DORA specifies that the Bulletin applies to “all life insurers licensed to do enterprise within the State of Colorado” and that it’s the opinion of the Division of Insurance coverage that the regulation “doesn’t apply to both group life insurance coverage insurance policies or annuity contracts,” however that its “applicability could also be prolonged to group life insurance coverage insurance policies and annuities sooner or later.” The proposed bulletin exempts ERISA certified worker advantages and surplus traces insurance policies.
Locke Lord will proceed to observe developments as DORA continues to implement SB21-169. When you’ve got any questions, please attain out to the creator or your Locke Lord accomplice.
For extra Locke Lord commentary on SB21-169 and implementing laws please see:
Locke Lord QuickStudy: Colorado Exposes Draft Life Insurance AI Data Testing Regulations for Unfair Discrimination by Paige D. Waters and Stephanie O’Neill Macro, October 9, 2023
Locke Lord QuickStudy: Colorado Insurance Division Adopts Proposed Algorithm and Predictive Model Governance Regulation by Paige D. Waters and Stephanie O’Neill Macro, September 22, 2023
New Privacy Laws from Coast to Coast: Comparing California, Virginia and Colorado by Theodore P. Augustinos and Alexander R. Cox, Fall 2021
[1] The regulation’s “applicability could also be prolonged to group life insurance coverage insurance policies and annuities sooner or later.”
[2] ““Exterior Client Knowledge and Data Supply” or “ECDIS” means, for the needs of this regulation, an information or an data supply that’s utilized by a life insurer to complement or supplant conventional underwriting components or different insurance coverage practices or to ascertain life-style indicators which might be utilized in insurance coverage practices. This time period consists of credit score scores, social media habits, places, buying habits, residence possession, instructional attainment, licensures, civil judgments, court docket data, occupation that doesn’t have a direct relationship to mortality, morbidity or longevity danger, consumer-generated Web of Issues information, biometric information, and any insurance coverage danger scores derived by the insurer or third-party from the above listed or comparable information and/or data sources.” 3 Colo. Code Regs. § 702-10.
[3] “Algorithm” is outlined within the act as “a computational or machine studying course of that informs human determination making in insurance coverage practices.” Colo. Rev. Stat. § 10-3-1104.9(8)(a).
[4] “Predictive mannequin” means “a strategy of utilizing mathematical and computational strategies that study present and historic information units for underlying patterns and calculate the likelihood of an final result.” Colo. Rev. Stat. § 10-3-1104.9(8)(d).
[5] “Unfair discrimination” is outlined within the act as using ECDIS “which have a correlation to race, colour, nationwide or ethnic origin, faith, intercourse, sexual orientation, incapacity, gender identification, or gender expression, and that makes use of ends in a disproportionately adverse final result for such classification or classifications, which adverse final result exceeds the cheap correlation to the underlying insurance coverage observe, together with losses and prices for underwriting.” (emphasis added) Colo. Rev. Stat. § 10-3-1104.9(8)(e).
[6] Title insurance coverage, bonds executed by certified surety corporations, and insurers of exempt industrial policyholders are exempt from the act.
[7] “Insurance coverage observe” means “advertising and marketing, underwriting, pricing, utilization administration, reimbursement methodologies, and claims administration within the transaction of insurance coverage.” Colo. Rev. Stat. § 10-3-1104.9(8)(c).
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