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SB21-169 - Protecting Consumers from Unfair Discrimination in Insurance Practices

On July 6, 2021, Governor Polis signed Senate Bill (SB) 21-169 into law, which protects Colorado consumers from insurance practices that result in unfair discrimination on the basis of race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identify, or gender expression. The legislation holds insurers accountable for testing their big data systems - including external consumer data and information sources, algorithms, and predictive models - to ensure they are not unfairly discriminating against consumers on the basis of a protected class. SB21-169 requires insurers to take corrective action to address any consumer harms that are discovered.

The rapid expansion of big data has transformed insurance practices. While these tools have the potential to benefit both insurers and consumers by increasing efficiencies, the unchecked use of big data can unintentionally result in harm to Black, indigenous and people of color and other protected groups. SB21-169 requires insurers to demonstrate to the Division of Insurance (Division) how they are testing their data and tools to ensure they do not result in unfair discrimination.

 

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Stakeholder Engagement Process

SB21-169 directs the Insurance Commissioner to work with stakeholders (insurance companies, insurance agents/producers, consumer representatives, and other interested parties) before adopting rules on how the companies should test and demonstrate to the Division that their use of big data is not unfairly discriminating against consumers. Separate stakeholder meetings will be held to address specific types of insurance (e.g., life, auto, health), as well as specific insurance practices (e.g., marketing, underwriting, claims management).

The Division has started the stakeholder engagement process for the following line of insurance and insurance practice: 

  • Life Insurance Underwriting: Life insurance is designed to pay money to a named beneficiary when a person dies, and can be an important part of a family’s long-term financial planning. Underwriting is the process by which an insurance company determines whether to offer insurance coverage to an individual, and if so, what premium the company will charge, based on the company's assessment of that individual’s risk.
  • Private Passenger Auto Insurance Underwriting: Auto insurance is important because it provides financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle. It is also a legal requirement for operating a vehicle. Underwriting is the process by which an insurance company determines whether to offer insurance coverage to an individual, and if so, what premium the company will charge, based on the company's assessment of that individual’s risk.
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Life Insurance Underwriting

Stakeholder Meetings

The Division hosted a stakeholder meeting regarding Senate Bill 21-169 (SB 21-169) and Unfair Discrimination in Insurance Practices, focusing on quantitative testing of underwriting decisions in life insurance, on June 17, from 11:00 - 12:00 pm MDT. At this meeting, ACLI and members of the life insurance industry presented their proposed quantitative testing regulation following the exposure of the Division’s draft quantitative testing regulation on September 28, 2023. 

Stakeholders are encouraged to submit written comments on the ACLI DRAFT Proposed Quantitative Testing Regulation, available by clicking the button below, by July 12, 2024 to DORA_INS_RulesandRecords@state.co.us:

ACLI DRAFT PROPOSED Quantitative Testing Regulation

A recording and copy of the presentation from the June 17 meeting can be accessed directly HERE. Materials from all past meetings related to life insurance underwriting can be accessed by clicking on the button below:

Stakeholder Meeting Materials

 
DRAFT Proposed Regulations

The Division released a DRAFT PROPOSED Algorithm and Predictive Model Quantitative Testing Regulation for informal comments. All interested stakeholders - including insurance companies, insurance agents/producers, consumer representatives, and other interested parties - are invited to submit written informal comments on this draft regulation by October 26, 2023.

Informal comments should be submitted to DORA_INS_RulesandRecords@state.co.us. Please note, stakeholders will have additional opportunities to submit written and oral comments to the Division.:

DRAFT PROPOSED Algorithm and Predictive Model Quantitative Testing Regulation

Quantitative Testing Regulation - Informal Comments

 
Adopted Regulations

Private Passenger Auto Insurance Underwriting

Stakeholder meetings

The Division has hosted a series of private passenger auto insurance underwriting stakeholder meetings, starting in April 2023, and continuing through 2024. Past meeting materials related to private passenger auto insurance underwriting can be accessed by clicking on the button below:

Stakeholder Meeting Materials

 

DRAFT Proposed Regulations

At the November 2, 2023 stakeholder meeting, the Division discussed governance and risk management framework requirements related to private passenger auto (PPA) insurance, and invited stakeholder to provide comments on the applicability of the Division's Regulation 10-1-1 Governance and Risk Management Framework Requirements for Life Insurers' Use of External Consumer Data and Information Sources, Algorithms, and Predictive Models to private passenger auto insurance. The comments received can be accessed by clicking on the button below. 

PPA Governance and Risk Management Framework - Informal Comments

 

Health Insurance

Stakeholder Meetings

The Division will be hosting a stakeholder meeting regarding Unfair Discrimination in Insurance Practices, focusing on health insurance, on July 30, 2024, from 1:00 - 2:00 pm MDT. The objective of this meeting is to provide a platform for consumer advocates to express their perspectives and concerns about the utilization of big data and artificial intelligence tools by health insurers.

All interested stakeholders - including insurance companies, insurance agents/producers, consumer representatives, and other interested parties - can register for the July 30 meeting, and access previous stakeholder meeting materials, by clicking on the buttons below:

Register for July 30 Meeting

Stakeholder Meeting Materials

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Announcements of future meetings and other news related to the implementation of SB21-169 will be posted on this website, and shared via email notification. You can sign up to receive these and other DOI email notices on the Division's Sign-Up for Division of Insurance Email Lists webpage. For notices specific to SB21-169, click on the "Subscribe to DOI/DORA Email Lists via GovDelivery" button, and select the checkbox next to "External Consumer Data and Unfair Discrimination in Insurance Practices" list.  

For additional information about the Division's implementation of SB21-169, please contact Jason Lapham (jason.lapham@state.co.us).