Introducing the idea that regulators encourage the use of innovation and AI Systems while recognizing that such systems present unique risks, such as the “potential for inaccuracy, unfair discrimination, data vulnerability, and lack of transparency and explainability,” the NAIC Model Bulletin on the Use of Artificial Intelligence Systems By Insurers breaks down guidance for AI governance and risk management in four sections:

Section 1 summarizes legislative authority, referring to the existing laws regarding unfair practices and disclosures, also referencing the “Principles in Artificial Intelligence” around fairness, accountability, compliance, transparency and security that the NAIC adopted in 2020.