As artificial intelligence (AI) takes seemingly every industry by storm, insurance regulators are reminding insurance companies to prioritize protecting consumers if they intend to use the technology. Oklahoma recently became the latest U.S. state to inform all state-licensed insurers that any AI use must comply with established laws and regulations.
“With new technologies comes the responsibility to ensure Oklahoma’s industry innovates while maintaining consumer protection,” said Glen Mulready, Oklahoma’s insurance commissioner, in a press release. “We hope to see artificial intelligence used to increase efficiencies and improve overall experiences.”
Could AI affect insurance rates?
Industry experts expect AI to influence how insurers set rates, which means it could affect insurance costs. The National Association of Insurance Commissioners (NAIC) posted background information and guidance about AI and wrote that insurance companies will begin using AI technology in significant ways, affecting everything from policy availability to premiums.
“AI will enable insurers to move from a ‘detect and repair’ framework to a ‘predict and prevent’ framework, allowing insurers to help their customers manage their risks and avoid claims altogether,” the NAIC wrote.
Oklahoma residents already face high property insurance costs. Oklahoma residents pay the third-highest home insurance rates in the U.S., with an average annual premium of $5,711, according to Insurify’s home insurance report. Car insurance premiums in the state are a little cheaper than average, at around $2,325 per year, but those rates increased 35% in 2024 alone, according to Insurify’s auto insurance report.
It’s not clear yet how exactly AI will affect insurance rates in Oklahoma or elsewhere. Even the NAIC writes that “AI’s impact on the world of insurance is still uncertain.” So far, the NAIC predicts AI may help track new issues and customer needs.
Industry AI guidelines: The basics
Oklahoma’s bulletin recognized the NAIC’s “Principles of Artificial Intelligence” published in 2020 as guidance for insurers as they start using AI. Principles included in the NAIC guidelines are
Oklahoma based its bulletin on a model the NAIC published in 2023, and it’s not the first U.S. state to do so. So far, including Oklahoma, at least 12 states and Washington, D.C., have posted bulletins using the NAIC model: Alaska, Connecticut, Illinois, Kentucky, Maryland, Nevada, New Hampshire, Pennsylvania, Rhode Island, Vermont, and Washington.
The NAIC’s “Principles of Artificial Intelligence” outline five important concepts regulators should use to oversee AI use in the insurance industry: fairness, ethics, accountability, compliance, and transparency.
What’s next: AI use will likely grow
Insurers are already using AI in claims processing, underwriting, fraud detection, and customer service with features like chatbots, according to the NAIC. One of the biggest advantages of AI is that it can analyze vast amounts of data, from climate risk to regional inflation factors. The NAIC put it this way: “Insurers are sitting on a treasure trove of big data, the main ingredient AI requires to be successful.”
Ideally, insurers can leverage AI to increase engagement, match customers with the right products, and personalize services and marketing, according to the NAIC.
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