Pennsylvania Sets Guidelines for Insurers on Artificial Intelligence Use

Artificial Intelligence© Just Super / Getty Images Signature / Canva

HARRISBURG, PA — The Pennsylvania Insurance Department (PID) has issued new guidance for insurers on the responsible use of Artificial Intelligence (AI). Announced on April 6, Notice 2024-04 aims to ensure that as insurers incorporate AI into their operations, they do so in a manner that upholds fairness for consumers and adheres to existing laws.

The guidance, which aligns with a model bulletin adopted by the National Association of Insurance Commissioners in December 2023, positions Pennsylvania as the eighth state to adopt such measures. This move reflects a growing recognition of the need to balance technological innovation with consumer protection and legal compliance.

Insurance Commissioner Michael Humphreys emphasized the dual nature of technology as both a facilitator of streamlined processes and a potential source of risk if not properly managed. “AI holds tremendous promise for enhancing efficiency within the insurance sector, but it also presents challenges that must be navigated carefully,” Humphreys stated. The notice issued by PID is designed to help insurers achieve this balance, ensuring that the deployment of AI technologies results in accurate and equitable outcomes for Pennsylvanians.

Among the key aspects of the guidance are:

  • A reminder to insurers that AI-supported decisions must comply with all relevant insurance laws and regulations;
  • An encouragement for innovation, coupled with an acknowledgment of potential risks including inaccuracies, unfair discrimination, data vulnerability, and opacity;
  • Details on the types of information and documents regarding insurers’ AI systems that PID may request during investigations or examinations;
  • Specific recommendations for establishing governance structures, accountability mechanisms, monitoring and audit protocols, and training programs related to AI systems (AIS Program).
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By outlining these expectations, PID seeks to promote a thoughtful and informed approach to AI adoption among insurers operating in Pennsylvania. The guidelines serve not only to protect consumers from potential harms associated with AI but also to guide insurers in leveraging technology in ways that enhance service delivery while remaining compliant with the law.

This initiative underscores the importance of regulatory oversight in the age of digital transformation, particularly in sectors as critical as insurance, where decisions can have profound impacts on individuals’ lives and well-being. As AI continues to reshape industries, the approach taken by Pennsylvania could serve as a model for how states can ensure that technological advancements benefit consumers and businesses alike, without compromising on fairness or transparency.

The issuance of Notice 2024-04 by the Pennsylvania Insurance Department marks a significant step towards addressing the complexities introduced by AI in the insurance sector. It reflects an understanding that while innovation should be embraced, it must be pursued with caution and responsibility to safeguard the interests of consumers and uphold the integrity of the insurance market.

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