Connecticut Insurance Department Releases Big Data and Anti-Discrimination Notice

On April 14, 2021, the State of Connecticut Insurance Department (CID) released a notice titled “The Usage of Big Data and Avoidance of Discriminatory Practices.” The CID addressed the notice to all of its licensed entities and persons.

In a press release accompanying the notice, CID Commissioner Andrew N. Mais stated “[t]he growing use of Big Data and Artificial Intelligence is changing the insurance landscape” and that the CID must collaborate with “all stakeholders to both support the growth of innovation and to protect consumers.”

The CID released the notice to remind insurers of their obligation to use technology and Big Data in compliance with Federal and State anti-discrimination laws.

In its notice, the CID defines Big Data broadly, noting that it encompasses data from sources such as “consumer intelligence, social media, credit and alternative credit information.” According to the CID, insurers’ use of this data is varied, with some activities including underwriting, claims activities, and using predictive models.

The notice states “the Department has the authority to require that insurance carriers and third-party data vendors, model developers, and bureaus provide the Department with access to data used to build models or algorithms included in all rate, form, and underwriting filings.”

An appendix attached to the notice includes sets of questions the CID may ask its licensees regarding the usage of data brokers. The requested information includes: information about the organization and who oversees data-related questions, the source of data, the storage of data, the curation of data, and data documentation. For example, under the “data source” topic, one specific question is whether data collected “is regulated in use like age, gender, race, income, marital status” This question elicits information that may aid the CID in its enforcement of Federal and State anti-discrimination laws.

Finally, the notice highlights three different areas where the CID may regulate insurers: internal data deployment, internal data governance, and risk management and compliance. First, the CID warns that insurers should be aware of how Big Data is used as a “precursor to or as a part of algorithms, predictive models, and analytic processes.” Second, the CID emphasizes its regulatory concerns regarding how insurers use data within the general insurance industry and whether insurers are governing their data in a “responsible and secure” manner. Lastly, the CID reiterates the need for Big Data “algorithms, predictive models, and various processes” to be monitored and maintained to ensure compliance with Federal and State anti-discrimination laws.

Crowell & Moring stands ready to help insurers and reinsurers understand the most promising uses, regulation and risks of artificial intelligence and Big Data in all aspects of their business, including product development, pricing and claim functions.