Life Insurance

NCOIL committee adopts resolutions on discrimination in underwriting

Having met its purpose, the committee will now dissolve pursuant to NCOIL bylaws. However, the AI and transparency resolutions will refer certain issues to NCOIL’s standing policy committees for further consideration.

The AI resolution states that while NCOIL believes the use of AI will surpass the use of individual factors in insurance underwriting, NCOIL should undertake a review of the use of AI in underwriting to ensure that it is not unfairly discriminatory.

The transparency resolution states that consumers, policymakers, insurance producers and the insurance industry would benefit from additional transparency in the development and use of insurance scores. The resolution refers the issue to the NCOIL Property & Casualty Insurance Committee to develop model legislation on insurance score transparency.

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The rating factor resolution states that NCOIL views the use of certain data in the underwriting of private and non-commercial insurance as contrary to public policy and unfairly discriminatory – specifically, data related to non-pending arrests, charges and indictments that don’t result in a conviction, and convictions that do not relate in any way to fraud or are not related to the insurability of a prospective or existing policyholder. NCOIL urged state legislatures to prohibit the use of such data in insurance underwriting.

The rating factor resolution also stated that NCOIL did not find any additional factors used in the underwriting of private, non-commercial insurance to be unfairly discriminatory in and of themselves, but found that some factors could be discriminatory in their application. NCOIL recognized that state legislatures may conclude that such rating factors should be prohibited or restricted. The resolution also recommended that states should conduct annual reviews of underwriting fairness.

“I am honored to have chaired this very important committee and am proud of the work that we have accomplished,” Breslin said. “Since being formed, we have heard from a variety of speakers, all of whom were very knowledgeable with differing opinions and viewpoints. Hearing from such a diverse group of experts enabled the committee to produce the strongest possible work product.”

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