Regulatory Framework for Insurers' Use of Data and Algorithms

This document is a guide detailing the implications of Colorado Senate Bill 21-169, which prohibits insurers from using external consumer data and algorithms in a manner that results in unfair discrimination against protected statuses. The bill emphasizes the need for insurers to review their data usage and the technology employed in their practices. It outlines the requirements for rulemaking under the new legislation, including the establishment of reporting and governance rules by the insurance commissioner. Insurers are mandated to document their use of external data and technology, ensuring compliance with the defined standards. The guide raises critical questions regarding the definitions of unfair discrimination, external data, and algorithms, urging insurers to seek clarification during stakeholder meetings. Additionally, it offers preparatory steps for insurers to inventory their data practices and coordinate across business units to meet the new regulatory requirements. This comprehensive approach aims to ensure fair practices within the insurance industry.