Regulation Issues
Advocacy | Fraternal Issues
The Alliance staff, Board of Directors, Board committees and task forces work together in a variety of ways to identify issues on which the Alliance focuses.
Colorado Regulation 10-1-1
Fraternals Doing Business in Colorado Should be Prepared to Comply with
New Regulation
The Colorado Insurance Division recently adopted the first-of-its-kind regulation on the use of artificial intelligence and big data. On September 21st the Division adopted 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. The regulation, which goes into effect November 14, 2023, applies to all life insurers authorized to do business in the state of Colorado. Under this regulation, life insurers must establish a “risk-based governance and risk management framework” that determines whether the use of specified external consumer data and information sources (ECDIS) as well as algorithms and predictive models that use ECDIS results in unfair discrimination with respect to race and remediates such discrimination if found. The regulation prescribes the underlying components of the governance and risk management framework in Section 5 and contemplates necessary actions for insurers who use third-party vendors and other external resources who may rely upon such data.
Important dates for insurers who use ECDIS as well as algorithms and/or predictive models that use ECDIS as of the effective date of the regulation:
June 1, 2024 – Narrative report due to the Division summarizing progress made towards compliance with Section 5.
December 1, 2024 (and annual thereafter) – Narrative report due summarizing compliance with the requirements set forth in Section 5 alongside information for those tasked with ensuring compliance and their respective roles.
Important dates for insurers who do NOT use ECDIS or algorithms and/or predictive models that use ECDIS as of the effective date of the regulation:
Within one month of the effective date (Nov. 14, 2023) and annually on December 1st thereafter – an attestation signed by an officer indicating the insurer does not use ESCID or algorithms and/or predictive models that use ECDIS
For those insurers who do NOT use ECDIS or algorithms and/or predictive models that use ECDIS as of the effective date of the regulation, but who intend to being using such data, must submit the report specified in Section 6.B. prior to use.
Life insurers should read the regulation in full, including listed definitions, to determine their obligations.
Several firms have since put out a brief overview of the regulation, which you can find here:
PBR Small Company Exemption
The Alliance and its advocacy groups secured the enactment of the amendment to the small company exemption provision from Principles Based Reserving (PBR) regulations contained in the NAIC Standard Valuation Manual to eliminate the current 450% RBC threshold for insurers with less than $50 million in annual life insurance premium. This exemption levels the playing field for smaller fraternals since their simplified operations do not warrant the same level of reserving as larger insurers.