Adopted by the Executive (EX) Committee and Plenary, Aug. 14, 2020
Adopted by the Executive (EX) Committee, Aug. 13, 2020
Adopted by the Innovation and Technology (EX) Task Force, Aug. 7, 2020

National Association of Insurance Commissioners (NAIC) Principles on
Artificial Intelligence (AI)RECOMMENDS that insurance companies and all persons or entities facilitating the business of insurance
that play an active role in the AI system life cycle, including third parties such as rating, data providers andadvisory organizations (hereafter referred to as “AI actors”) promote, consider, monitor and uphold thefollowing principles according to their respective roles; andTHIS DOCUMENT is intended to establish consistent high-level guiding principles for AI actors. Theseprinciples are guidance and do not carry the weight of law or impose any legal liability. This guidance canserve to inform and establish general expectations for AI actors and systems emphasizing the importanceof accountability, compliance, transparency, and safe, secure, fair and robust outputs.

Further, THIS DOCUMENT

Should be used to assist regulators and NAIC committees addressing insurance-specific AI applications.
The level of regulatory oversight may vary based on the risk and impact to the consumer. These principles
should be interpreted and applied in a manner that accommodates the nature and pace of change in theuse of AI by the insurance industry and promotes innovation, while protecting the consumer.

Fair and Ethicala.

AI actors should respect the rule of law throughout the AI life cycle. This includes, but
is not limited to, insurance laws and regulations, such as those relating to tradepractices, unfair discrimination, access to insurance, underwriting, privacy,consumer protection and eligibility practices, ratemaking standards, advertisingdecisions, claims practices, and solvency.

b.

Consistent with the risk-based foundation of insurance, AI actors should proactively
engage in responsible stewardship of trustworthy AI in pursuit of beneficial
outcomes for consumers and to avoid proxy discrimination against protectedclasses. AI systems should not be designed to harm or deceive people and should be
implemented in a manner that avoids harmful or unintended consequences and corrects
and remediates for such consequences when they occur.

© 2020 National Association of Insurance Commissioners

1Accountablea.

AI actors should be accountable for ensuring that AI systems operate in compliance withthese principles consistent with the actors’ roles, within the appropriate context andevolving technologies. Any AI system should be compliant with legal requirements
governing its use of data and algorithms during its phase of the insurance life
cycle. Data supporting the final outcome of an AI application should be retained
and be able to be produced in accordance with applicable insurance laws andregulations in each jurisdiction. AI actors should be responsible for the creation,implementation and impacts of any AI system, even if the impacts are unintended. AIactors should implement mechanisms and safeguards consistent with the degree
and nature of the risks posed by AI to ensure all applicable laws and regulations
are followed, including ongoing (human or otherwise) monitoring and, whenappropriate, human intervention.

Complianta.

AI actors must have the knowledge and resources in place to comply with all applicableinsurance laws and regulations. AI actors must recognize that insurance is primarily
regulated by the individual states and territories of the United States as well as by thefederal government, and that AI systems must comply with the insurance laws andregulations within each individual jurisdiction. Compliance is required whether theviolation is intentional or unintentional. Compliance with legal requirements is an ongoingprocess. Thus, any AI system that is deployed must be consistent with applicable laws andsafeguards against outcomes that are either unfairly discriminatory or otherwise violate
legal standards, including privacy and data security laws and regulations.

Transparenta.

For the purpose of improving the public’s confidence in AI, AI actors should commit totransparency and responsible disclosures regarding AI systems to relevant stakeholders.
AI actors must have the ability to protect confidentiality of proprietary algorithms,
provided adherence to individual state law and regulations in all states where AI isdeployed can be demonstrated. These proactive disclosures include revealing the kind ofdata being used, the purpose of the data in the AI system and consequences for allstakeholders.

b.

Consistent with applicable laws and regulations, stakeholders (which includesregulators and consumers) should have a way to inquire about, review and seek
recourse for AI-driven insurance decisions. This information should be easy-tounderstand and describe the factors that lead to the prediction, recommendation ordecision. This information may be presented differently and should be appropriate forapplicable stakeholders.

© 2020 National Association of Insurance Commissioners

2Secure, Safe and Robusta.

AI systems should be robust, secure and safe throughout the entire life cycle so that inconditions of normal or reasonably foreseeable use, or adverse conditions, they canfunction in compliance with applicable laws and regulations. To this end, AI actors should
ensure a reasonable level of traceability in relation to datasets, processes and decisions
made during the AI system life cycle. AI actors should enable analysis of the AI system’soutcomes, responses and other insurance-related inquiries, as appropriate in keepingwith applicable industry best practices and legal requirements.

b.

AI actors should, based on their roles, the situational context and their ability to act, apply
a systematic risk management approach to each phase of the AI system life cycle on acontinuous basis to address risks related to AI systems, including privacy, digital security
and unfair discrimination as defined by applicable laws and regulations.

W:\National Meetings\2020\Summer\Plenary\AI principles as Adopted by the TF_0807.docx© 2020 National Association of Insurance Commissioners

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