NAIC regulators fire up dormant accelerated underwriting proposals

NAIC regulators will again tackle accelerated underwriting.

By John Hilton

State insurance regulators got back to work Wednesday on accelerated underwriting, and set a goal to adopt guidance during the National Association of Insurance Commissioners' summer meeting in August.

Wisconsin Insurance Commissioner Nathan Houdek outlined a schedule whereby a small drafting group from the Accelerated Underwriting Working Group will work on successive drafts over the next four months. If successful, the result will be completion of these two documents:

1. The draft Regulatory Guidance and Considerations document; and

2. The draft Referral to the Market Conduct Examination Guidelines Working Group

The two drafts were initially exposed for comment in February 2023. Then the AUWG paused its work pending completion of two projects under the Innovation, Cybersecurity and Innovation Committee:

1. A survey on the use of artificial intelligence-machine learning in life insurance under the Big Data and AI Working Group. Fifty-eight percent of life insurers are either using or have an interest in using artificial intelligence in their businesses, the survey found.

2. The NAIC Model Bulletin: Use of Artificial Intelligence Systems by Insurers. The bulletin is intended to "guide insurers to employ AI consistent with existing market conduct, corporate governance, and unfair and deceptive trade practice laws," the law firm Locke Lord explained.

Created in 2019

The drafting process will be done in regulator-only meetings, Houdek said.

"However, we are committed to reviewing and discussing comments on each of the drafts during the open meetings," he quickly added. "And we want to facilitate full understanding by all stakeholders, regulators and interested parties and ensure an opportunity for input throughout the drafting process."

There was no discussion Wednesday on the timeline or the work as outlined by Houdek.

Created during the National Association of Insurance Commissioners' 2019 summer meeting, the AUWG began work with several charges.

Among them, to "consider the use of external data and data analytics in accelerated life underwriting, including consideration of the ongoing work of the Life Actuarial (A) Task Force on the issue and, if appropriate, drafting guidance for the states.”

Accelerated underwriting is more than a decade old with the earliest programs having been brought to market in 2012. Still, the idea remained more fantasy than reality for many years. Then the COVID-19 pandemic hit.

AUW face amounts rapidly increased during the onset of COVID-19 in order to meet the demand for socially distant underwriting options. Those options remained in place and even continued to grow, post-pandemic, Munich Re found in a 2022 survey of life insurers.

"In the future, we expect to see human intervention decline and digital health data sources continue to gain traction as life insurance carriers work towards optimizing their accelerated underwriting programs to issue more policies with faster turnaround times," Munich Re concluded.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.