On November 14, 2023, the Colorado Division of Insurance’s AI insurance regulations went into effect. Colorado is now the first state in the nation to adopt regulations specifically aimed at insurance algorithms.

Colorado’s regulation requires life insurance companies to report how they review AI models and use External Consumer Data and Information Sources (ECDIS), which includes nontraditional data such as social media posts, shopping habits, Internet of Things data, biometric data, and occupation information that does not have a direct relationship to mortality, among others. Lift insurance companies are also required to develop a governance and risk management framework that includes thirteen specific components.

While this regulation is specific to life insurance, Colorado has also proposed adopting it for auto insurers, which has met resistance from auto insurance trade groups. The deadline for comments on adopting the framework for the auto insurance industry is December 1.

Although Colorado is the first state, several others regulators—including from California, Connecticut, New York, and Washington, D.C.—have issued warnings or notices requiring carriers to demonstrate that their models and data aren’t discriminatory, and New Jersey has introduced similar legislation. Subject entities should therefore pay close attention to the changing regulatory landscape.

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