In a bulletin released on June 12, the Texas Department of Insurance (TDI) emphasized that all regulated entities must ensure their decisions and actions, especially those influenced by advanced technologies like artificial intelligence (AI), comply with existing insurance laws and regulations.
These regulations includes restrictions on unfair trade practices and discrimination. In the bulletin, the TDI outlined expectations for regulated entities regarding the governance of AI technologies, applicable to both the entities themselves and any third parties they collaborate with, to safeguard consumer interests and privacy and promote ethical AI systems.
As AI adoption increases, the TDI continues to stress the necessity for compliance with laws to protect consumer, encouraging companies to consider the Principles on Artificial Intelligence from the National Association of Insurance Commissioners, and the AI Code of Ethics outlined by the Texas Department of Information Resources.
The TDI also expects adherence to various provisions within the Texas Insurance Code, which regulate unfair trade practices, claims settlements, discrimination, corporate governance and licensing of agents and adjusters. These laws prohibit unfair practices, require equitable claims processing and set licensing standards for agents.
The TDI also provided guidance mandating that AI-driven decisions must meet legal standards to ensure they are not inaccurate, arbitrary or discriminatory. Regulated entities are advised to implement controls to limit potential negative consumer outcomes. Decisions made by AI should require human review and approval before implementation. The TDI acknowledged the importance of strong governance, risk management, and internal audits in ensuring compliance with legal standards and encouraged the development of methods to identify errors and biases in AI systems.
Lastly, the TDI announced its plans to monitor AI use through examinations. The department emphasized that it welcomes consumer complaints regarding AI practices, pledging to investigate any such issues. Regulated entities are expected to present their procedures and protections when requested. The TDI said it will assess various aspects of AI usage, including governance frameworks, risk management and data privacy.
The bulletin was intended to clarify regulatory expectations without prescribing specific practices or documentation requirements. It encouraged a review of the AI Code of Ethics to foster responsible AI usage that emphasizes oversight, fairness, accuracy, transparency and accountability.
The TDI emphasized that it maintains its capacity to conduct investigations and enforce actions based on any regulatory concerns, emphasizing that the bulletin does not restrict their authority in monitoring or examining AI-related decisions made by regulated entities.