US NAIC Spring 2024 National Meeting Highlights: Third-Party Data and Models (H) Task Force
The Third-Party Data and Models (H) Task Force (“Task Force”) is a newly established task force under the Innovation, Cybersecurity, and Technology (H) Committee (“H Committee”) of the US National Association of Insurance Commissioners (“NAIC”). The Task Force held its inaugural meeting on March 16, 2024 at the NAIC’s Spring 2024 National Meeting.
The Task Force’s charges for 2024 are to:
- Develop and propose a framework for the regulatory oversight of third-party data and predictive models; and
- Monitor and report on state, federal, and international activities related to governmental oversight and regulation of third-party data and model vendors and their products and services.
During this first year of its existence, the Task Force plans to assess what types of artificial intelligence (“AI”)/machine learning (“ML”) models provided by third parties are currently being used by insurers, and what potential regulation might be necessary. During its second year, the Task Force plans to draft a regulatory framework for the use of third-party data and models by insurers, which will be proposed to the H Committee for review and approval through the NAIC Plenary.
As part of its kick-off, the Task Force received a presentation from Donna Sirmons of the State Board of Administration of Florida regarding the Florida Commission on Hurricane Loss Projection Methodology (“FCHLPM”). She discussed the development of Florida’s regulatory framework for use of catastrophe models by the insurance industry and the results for the Florida insurance market. She explained that FCHLPM has a panel of experts, including an actuary from the Florida Office of Insurance Regulation and state meteorologists, who review “hurricane loss projections used in residential property insurance rate filings and flood loss projections used in rate filings for personal lines residential flood insurance coverage” as authorized under Section 627.0628(3)(a), Florida Statutes.
The Task Force is expected to play an important role in the NAIC’s ongoing consideration of the use of AI, ML, and big data in insurance, with a focus on data and models provided by third parties. Our team will be monitoring and writing about the work of this Task Force.
To view additional updates from the US NAIC Spring 2024 National Meeting, visit our meeting highlights page.
