Regulators Place ‘Heightened Emphasis’ On Insurer Use Of Big Data: Altmaier

TAMPA--All eyes are on Colorado since it is the only state to pass a law regulating use of algorithmic data by insurers.

It is often the case with insurance regulation that the first established law becomes the de facto regulation across the country. That might not be the case this time, said Florida Insurance Commissioner David Altmaier, a guest Tuesday morning at the 2022 Life Insurance Conference, sponsored by LIMRA, LOMA, Society of Actuaries and the American Council of Life Insurers.

Altmaier appeared via video link after canceling his in-person visit at the last minute. The Florida Legislature is dealing with a property insurance crisis that required the commissioner to remain in Tallahassee.

There is a "heightened emphasis," said Altmaier, choosing his words carefully, on how insurance companies are using big data in the underwriting and applications process.

The Colorado bill took effect in July and bill that bars insurers from using algorithms, external data sources and predictive modeling systems in ways that discriminate against people based on “race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity, or gender expression.” The law applies to life, disability, long-term care insurance and annuity issuers, along with property and casualty insurers.

'Big Fans'

The National Association of Insurance Commissioners, which Altmaier headed as president in 2021, is considering the big data issue carefully, he said.

"We're big fans of innovation," he said. "And I think that those kinds of tools can really be helpful in matching products for consumers and making sure that everybody walks away with coverage that's beneficial to them and to their families. But what that ultimately looks like, I think there's a lot more discussions that we need to be having in terms of what that looks like."

One thing the NAIC will not do is interfere with Colorado Insurance Commissioner Michael Conway as his office puts the new law into practice, Altmaier said.

The Colorado law defines “external consumer data and information source” as “a data or an information source that is used by an insurer to supplement traditional underwriting or other insurance practices or to establish lifestyle indicators that are used in insurance practices.”

Examples of those data sources can include “credit scores, social media habits, locations, purchasing habits, home ownership, educational attainment, occupation, licensures, civil judgments and court records.”

The NAIC frequently runs into difficulty reaching consensus among more liberal state leaders such as California and New York and their more conservative colleagues in Iowa and the Midwest. Colorado leadership falls more heavily into the former camp under Gov. Jared Polis, D.

Regardless of political differences, Altmaier assured LIMRA attendees that commissioners are aware of the industry's need for consistency in regulation.

"One of the things that we hear commonly from industry is that it's a lot easier to comply with one general framework than it is to comply with 56, depending on how many of our states and territories that they operate in," the commissioner said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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