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The Michigan Division of Insurance coverage and Monetary Companies (DIFS) has issued a bulletin outlining its expectations for insurance coverage carriers relating to the event, acquisition, and use of synthetic intelligence (AI) programs.

The bulletin additionally clarifies the sorts of info the division could request when investigating or analyzing a service’s use of AI, in response to DIFS Director Anita Fox.

In an AM Finest report, Fox emphasised the significance of compliance, stating that whereas AI is remodeling numerous industries, together with insurance coverage, all choices made by insurers utilizing these programs should adhere to relevant federal and state legal guidelines and laws.

This steering from Michigan follows comparable measures just lately issued by New York, which centered on stopping unintended discrimination in using AI by insurers.

Whereas AI has pushed product innovation and streamlined many insurance coverage processes, DIFS highlighted potential dangers related to AI, together with inaccuracies, discrimination, and challenges in explaining inner processes.

To mitigate these dangers, the regulator suggested that carriers set up AI governance frameworks emphasizing transparency, equity, and accountability whereas defending commerce secrets and techniques and proprietary info.

The bulletin recommends that carriers doc AI system validation, auditing, and testing procedures, together with evaluations of the reliability of AI outputs that would influence decision-making.

Moreover, when utilizing third-party AI programs and information, carriers are suggested to carry out due diligence on potential companions and their information, fashions, and programs, with documentation of those processes being important for regulatory investigations.

DIFS famous that whereas the bulletin supplies steering on AI use and the investigative course of, it isn’t exhaustive. Carriers are allowed to current different strategies to exhibit compliance, and the bulletin is just not supposed to prescribe or endorse any particular apply or system.

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