The Vermont Department of Financial Regulation has recently issued Bulletin No. 229, reminding all Insurers that decisions or actions that are made or supported by Artificial Intelligence Systems (AI) must comply with all applicable insurance laws and regulations. The key highlights are as follows:
- Insurers are expected to develop, implement, and maintain a written program (an “AIS Program”) for the responsible use of AI Systems that make or support decisions related to regulated insurance practices.
- Decisions made as a result of an Insurer’s use of AI Systems are subject to the Department’s examination to determine that the reliance is compliant with all applicable existing legal standards governing the Insurer.
- The AIS Program should be designed to mitigate the risk that the Insurer’s use of an AI System will result in Adverse Consumer Outcomes.
- The AIS Program should address governance, risk management controls, and internal audit functions.
- The AIS Program should include processes and procedures providing notice to impacted consumers that AI Systems are in use.
- Each AIS Program should address the Insurer’s process for acquiring, using, or relying on (i) third-party data to develop AI Systems; and (ii) AI Systems developed by a third party, which may include the establishment of standards, policies, procedures, and protocols.
Please note that the bulletin became effective upon issuance on March 12, 2024.
For any questions related to the above referenced bulletin in Vermont, please contact Westmont Associates.