The Texas Department of Insurance (TDI) published a bulletin informing insurers and other regulated entities that the use of AI and other advanced analytical tools must comply with state insurance laws and regulations.
The TDI stresses that the method of decision-making used does not change what is required by the regulatory rules. Decisions supported by AI must comply with all applicable laws and regulations, including the following:
- AI cannot be used to engage in unfair methods of competition, unfair or deceptive acts, or unfair claims settlement practices
- AI and algorithms cannot be used to limit coverage based on race, religion, age, gender, marital status, geographic location, disability, and others
- AI-derived rates must be just, fair, reasonable, and adequate
- AI cannot replace certain acts that must be performed by a licensed agent or adjuster
Insurers and other regulated entities must also enact guardrails to ensure AI systems are not in violation of any regulation. TDI expects that a person review any decision made by AI. TDI also expects insurers to develop testing methods to identify errors and bias in AI. TDI will actively monitor the use of AI through routine examinations, product filings, and consumer complaints.
The bulletin can be found here.