Scott Kosnoff Discusses NAIC’s Expanded AI Risk Evaluation Supplement With Law360 Insurance Authority

Insurance partner and leader of Faegre Drinker’s AI-X team Scott Kosnoff spoke with Law360 Insurance Authority about the National Association of Insurance Commissioners’ (NAIC) recently released AI Risk Evaluation Supplement version 5.0 and its expanded scope, which now includes generalized linear models (GLM).

Kosnoff noted that the addition of GLMs could raise concerns within the industry because it significantly broadens the scope of what insurers would be expected to respond to and could increase compliance burdens.

"GLMs have been around for a long, long time, and insurance companies have made heavy use of them in their operations — and to their way of thinking, the use of these GLMs for years and years has been non-controversial, and it hasn't led to consumer or other kinds of harm," Kosnoff explained. He suggested that, rather than removing the sections entirely, the NAIC could specify the types or use cases of GLMs that raise regulatory concerns.

Kosnoff also noted that, as the NAIC’s pilot program nears completion, a key question for the insurance industry is how regulators will move forward and whether they have the bandwidth to assess the responses to the supplement and make informed judgments.