US NAIC Spring 2023 National Meeting Highlights: Accelerated Underwriting (A) Working Group

The Accelerated Underwriting (A) Working Group (the “Working Group”), a subgroup of the Life Insurance and Annuities (A) Committee of the US National Association of Insurance Commissioners (“NAIC”), held a virtual meeting on February 22, 2023, in lieu of meeting in person at the NAIC’s 2023 Spring National Meeting, during which the Working Group exposed draft guidance for regulators when reviewing accelerated underwriting programs used by life insurers (the “Draft Guidance”). 

The purpose of the Draft Guidance is to help regulators ensure that accelerated underwriting programs are fair, transparent, secure, and in compliance with existing law. The Draft Guidance includes a number of regulatory considerations for state insurance regulators when reviewing accelerated underwriting programs, such as whether:¹

• Data inputs are transparent, accurate, reliable, and the data itself is evaluated for unfair bias;
• External data sources, algorithms or predictive models are based on sound actuarial principles, including a causal or rational explanation why a rating variable is correlated to expected loss or expense, and why that correlation is consistent with the expected direction of the relationship;
• Predictive models or machine learning algorithms achieve an outcome that is not unfairly discriminatory; and
• Reasons for an adverse underwriting decision are provided to the consumer along with all information upon which the insurer based its adverse underwriting decision.

Additionally, the Draft Guidance provides various examples of questions and requests which regulators may want to pose to life insurers when reviewing accelerated underwriting programs, including, for example:

• What specific external data or information about life insurance applicants is being utilized by the accelerated underwriting program?
• How does the company obtain any external data or information used as part of its life insurance accelerated underwriting program?
• Explain in detail how the company discloses to applicants for life insurance what external information is used in its accelerated underwriting program and how this external information is used in the accelerated underwriting program.

The Draft Guidance was exposed for a 45-day public comment period which ended on April 15, 2023. 

The Working Group also indicated that work currently being conducted by other NAIC groups, including the Big Data and Artificial Intelligence (H) Working Group and the Privacy Protections (H) Working Group, may lead to additional guidance regarding accelerated underwriting in life insurance. 

To view additional updates from the US NAIC Spring 2023 National Meeting, visit our meeting highlights page.

¹ For the full set of regulatory considerations and questions, view the Draft Guidance.