The Oklahoma Department of Insurance published a bulletin reminding insurers conducting business in the state of the permissible use of artificial intelligence systems, per Oklahoma Insurance law.
While insurers have benefitted from the use of AI systems in many stages of the insurance cycle, it is not without risk. Any action or decision affecting insureds made and supported by AI and AI systems must comply with applicable insurance laws and regulations, including unfair trade practices and unfair discrimination laws.
The Unfair Trade Practices Model Act (36 O.S §§ 1201) prohibits practices that constitute unfair methods of competition or deceptive acts and practices. Insurers should be aware that the use of AI systems can result in unfair discrimination, inaccuracy, data vulnerability, and lack of transparency, and take action to avoid those risks.
The Property and Casualty Competitive Loss Cost Rating Act requires that P&C insurance rates not be excessive, inadequate, or unfairly discriminatory. These laws apply regardless of the methods used to derive them, including AI and AI systems.
Insurers are expected to develop and implement a written AIS Program for the responsible use of AI Systems. The bulletin outlines a series of general guidelines for AIS programs that include addressing governance, risk management controls, audit functions, how AI is used with the Enterprise Risk Management System, how the AIS will address all phases of the system's life cycle, and others.
Oklahoma adopted the NAIC Model Bulletin for Use of Artificial Intelligence Systems by Insurers; a more detailed discussion can be found here: NAIC Model Bulletin: Use of Artificial Intelligence Systems by Insurers.
The Oklahoma bulletin can be found here.