The Delaware Department of Insurance published a bulletin reminding insurers that they must comply with all insurance laws and regulations, regardless of the method used to make decisions or actions, including Artificial Intelligence Systems.
Delaware is following the footsteps of some other states in adopting NAIC’s Model Bulletin: Use of Artificial Intelligence Systems by Insurers, which relays the expectations of insurers in their development and use of AI technologies.
The use of AI systems has been largely beneficial in many stages of the insurance cycle, but insurers must be aware of the potential risks. Any action or decision affecting insureds made and supported by AI and AI systems must comply with applicable Delaware insurance laws and regulations, including:
- 18 Del. C. Ch. 23 - The Unfair Trade Practices Act, which defines and prohibits practices that constitute unfair methods of competition or unfair or deceptive acts.
- 18 Del. C § 2304 - The Unfair Claims Settlement Practices Act, which sets standards for the investigation of insurance claims.
- 18 Del. C. Ch. 85 - The Corporate Governance Annual Disclosure Act, which requires carriers to provide a summary of their corporate governance structure, policies, and practices.
- 18 Del. C. Chs. 25 and 26 - Delaware Rate Making Laws, which state insurance rates must not be excessive, inadequate, or unfairly discriminatory.
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 includes 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.
More on the NAIC Model Bulletin can be found here.
The Delaware bulletin can be found here.