Executive Order 14110: Understanding Its Impact on Federal Emergency Powers
Key Takeaways Executive Order (EO) 14110 is an order issued by the United Stats Federal Government ordering certain actions in
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Targeting Algorithmic Discrimination: Colorado’s law focuses on preventing unfair discrimination in life insurance through algorithmic data use.
ECDIS Management: The regulation emphasizes the proper handling of non-traditional data sources in insurance processes.
Broad Impact: It affects not only insurers but also vendors and subcontractors involved in life insurance in Colorado.
Alignment with Global Standards: Colorado’s approach aligns with international AI risk management frameworks and standards.
In July 2021, Colorado embarked on a pioneering journey in the insurance industry. Governor Jared Polis signed a groundbreaking law, SB 21-169, tasking the Colorado Division of Insurance (CO DOI) with developing regulations to address algorithmic discrimination in insurance. Fast forward to September 2023, and the final regulation for life insurance providers, known as Colorado Regulation 10-1-1, was unveiled and implemented on November 14, 2023.
Here we give an overview of the Colorado AI Regulation.
The crux of this regulation revolves around the use of ‘External Consumer Data and Information Sources’ (ECDIS) in life insurance. ECDIS represents non-traditional data types – think social media habits or biometric data. Insurers leveraging ECDIS in setting policy premiums or reviewing claims must now adhere to strict risk management protocols. This move ensures that ECDIS usage doesn’t translate into unfair discrimination against consumers.
This regulation isn’t just for insurers operating in Colorado. It extends to vendors and subcontractors engaged in underwriting or claim processing. Initially focusing on life insurance, Colorado’s vision encompasses all insurance types, with car insurance next in line for similar scrutiny.
ECDIS, in essence, includes data that isn’t traditionally used in insurance or actuarial science. Given the varied quality and representativeness of publicly available data, insurers are now required to establish structured risk management processes for employing such information.
| Aspect | Details |
|---|---|
| Legislation | SB 21-169, signed into law by Governor Jared Polis in July 2021. |
| Effective Date | November 14, 2023. |
| Targeted Area | Life insurance providers using ECDIS in Colorado. |
| Main Focus | Preventing algorithmic discrimination through the use of ECDIS. |
| ECDIS Definition | Non-traditional data sources like social media habits, educational attainment, biometric information. |
| Compliance Requirements | Establishing a risk management framework, inventory of AI use cases, and regular reporting to CO DOI. |
Insurers must navigate three main avenues to comply:
Moreover, insurers must be prepared to test for algorithmic discrimination and train their data scientists accordingly.
Colorado’s regulation mirrors the National Association of Insurance Commissioners’ (NAIC) draft bulletin on AI risk management, which is broader in scope. Additionally, this regulation is in step with global movements like the EU AI Act, NIST AI Risk Management Framework, and the proposed ISO 42001 standard. These frameworks, emphasizing a comprehensive approach to AI risk management, are becoming increasingly aligned, allowing compliance with one to potentially satisfy others.
Colorado’s AI life insurance regulation marks a significant step in the responsible and ethical use of AI in the insurance industry. By aligning with global standards and encouraging comprehensive risk management practices, Colorado sets a precedent for other states and countries to follow, ensuring that AI’s benefits are harnessed without compromising fairness and equity in insurance services.
Drew is regulatory expert, specializing in AI regulation and compliance
The primary goal of the Colorado AI Life Insurance Regulation, established through SB 21-169, is to prevent unfair discrimination in the life insurance industry caused by the use of algorithmic data, particularly focusing on External Consumer Data and Information Sources (ECDIS). It aims to ensure that life insurance providers in Colorado use data and algorithms in a manner that is fair, transparent, and does not disadvantage certain groups of people.
ompliance with this regulation is mandatory for all life insurance providers operating in Colorado, along with their vendors and subcontractors. Compliance involves establishing a risk management framework to oversee the use of ECDIS, conducting a thorough inventory of AI and ECDIS use cases, and submitting regular reports to the Colorado Division of Insurance (CO DOI). These steps are designed to ensure that the use of non-traditional data does not result in biased or discriminatory outcomes.
he Colorado AI Life Insurance Regulation is in step with other prominent AI risk management frameworks and standards, like the National Association of Insurance Commissioners’ (NAIC) draft bulletin on AI risk management, the EU AI Act, the NIST AI Risk Management Framework, and the proposed ISO 42001 standard. This alignment suggests that complying with Colorado’s regulation may also help insurers meet broader national and international standards for ethical AI use in the insurance industry.
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