December 10, 2019

NAIC Expands Activities on Use of Big Data in Insurance in the US

National Association of Insurance Commissioners discusses the use of big data and predictive analytics in insurance.

At the National Association of Insurance Commissioners (NAIC) Fall National Meeting, the Big Data (EX) Working Group received presentations on the use of data and predictive analytics in fraud detection and claim settlements in the US insurance industry. Members of the Working Group discussed their views on whether regulators currently possess appropriate authority under state unfair trade practices and claim settlement laws and regulations to address developing marketplace practices regarding the use of data in insurance. A consumer advocate organization gave a presentation to the Working Group suggesting there may be a need for insurance regulators to gain regulatory oversight of third party algorithm vendors (currently not subject to regulatory authority) by updating requirements applicable to industry advisory organizations (which are subject to regulatory authority) to include such third party vendors.

The NAIC also undertook a number of training initiatives for states’ insurance department staff through 2019. The NAIC’s Casualty Actuarial and Statistical Task Force (CASTF) facilitated training on predictive analytics through a series of webinars and conference calls; in addition, CASTF is working on a white paper on best practices for regulatory review of predictive analytics. Comments on the exposed white paper are currently under review and consideration.

In addition, the NAIC is also developing technical training for actuaries and statisticians as well as non-technical rate review training for rate filing reviewers and market conduct examiners. The latter will focus on evaluating rate classes for unfair discrimination and when additional actuarial assistance is needed.