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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
HOUSE BILL 3186 By: Phillips
AS INTRODUCED
An Act relating to insurance; enacting the Insurance
Consumer Rights Act; defining terms; prohibiting
discrimination by insurers; prohibiting the use of
algorithms and predictive models that unfairly
discriminate; directing Insurance Commissioner to
adopt rules; directing process for rule creation;
directing use of necessary provisions; permitting
Insurance Commissioner to investigate; clarifying
applicability of act; providing for codification; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3701 of Title 36, unless there
is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Insurance
Consumer Rights Act".
SECTION 2. NEW LAW A new sect ion of law to be codified
in the Oklahoma Statutes as Section 3702 of Title 36, unless there
is created a duplication in numbering, reads as follows:
As used in this act, unless the context other wise requires:
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1. "Algorithm" means a computational or machine learning
process that informs human decision-making in insurance practices;
2. "External consumer data and information source " means a data
or an information source that is used by an insurer to supplement
traditional underwriting or other insuran ce practices or to
establish lifestyle indicators that are used in insurance practices.
External consumer data and information sources include credit
scores, social media habits, locations, purchasing habits, home
ownership, educational attainment, occupation, licensures, civil
judgments, and court records. The Insurance Commissioner may
promulgate rules to further define external consumer data and
information source for particular lines of insurance and insurance
practices;
3. "Insurance practice" means marketing, underwriting, pricing,
utilization management, reimbursement methodologies, and claims
management in the transaction of insurance ;
4. "Predictive model" means a process of using mathematical and
computational methods that examine current and historical data sets
for underlying patterns and to calculate the probability of an
outcome;
5. "Unfairly discriminate " and "unfair discrimination" include
the use of one or more external consumer data and information
sources, as well as algorithms or pred ictive models using external
consumer data and information sources, that have a correlation to
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race, color, national or ethnic origin, r eligion, sex, sexual
orientation, disability, gender identity, or gender expression, and
that use results in a dispropor tionately negative outcome for such
classification or classifications, which negative outcome exceeds
the reasonable correlation to the under lying insurance practice,
including losses, and costs for underwriting.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3703 of Title 36, unless there
is created a duplication in numbering, reads as follows:
Insurers shall not, with regard to any insurance practice :
A. Unfairly discriminate based on ra ce, color, national or
ethnic origin, religion, sex, sexual orientation, disability, gender
identity, or gender expression; o r
B. Pursuant to rules adopted by the Insurance Commissioner, use
any external consumer data and information so urces, or any
algorithms or predictive models that use external consumer data and
information sources, in a way that unfairly discriminates based on
race, color, national or ethnic origin, religion, sex, sexual
orientation, disability, gender identity, or gender expression.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3704 of Title 36, unless there
is created a duplication in numbering, reads as follows:
A. 1. The Insurance Commissioner sh all adopt rules for the
implementation of this act.
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2. The Insurance Commissioner shall engage in a stakeholder
process prior to the adoption of rules for any type of insurance
that includes carriers, producers, consumer representatives, and
other interested parties. The Commissioner shall hold stakeholder
meetings for stakeholders of different types of insurance to ensure
sufficient opportunity to consider factors and processes relevant to
each type of insurance. The Commissioner shall provide notice of
stakeholder meetings on the agency website. Stakeholder meetings
shall be open to the public.
B. After the stakeholder process described in paragraph 2 of
subsection A of this section, the Insurance Commissioner shall adopt
rules for specific types of insurance, by insu rance practice, which
rules establish the means by which an insurer may demonstrate, to
the extent practicable, that it has tested whether its use of
external consumer data and informati on sources, as well as
algorithms or predictive models using external cons umer data and
information sources, unfairly di scriminates based on race, color,
national or ethnic origin, religion, sex, sexual orientation,
disability, gender identity, or gender expre ssion. The rules shall
become effective January 1, 2023, at the earliest, for any type of
insurance, and the Commissioner shall consider solvency impacts, if
any, to insurers in adopting the rules.
C. Rules adopted pursuant to this act shall require each
insurer to:
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1. Provide information to the Insurance Commissioner concerning
the external consumer data and information sources used by the
insurer in the development and implementation of algorithms and
predictive models for a particular type of insurance and insurance
practice;
2. Provide an explanation of the m anner in which the insurer
uses external consum er data and information sources, as well as
algorithms and predictive models using external consumer data and
information sources, for the particular type of insurance and
insurance practice;
3. Establish and maintain a risk management framework or
similar processes or procedures that are reasonably designed to
determine, to the extent practicable, whether the insurer 's use of
external consumer data and information sources, as well as
algorithms and predictive models using external consumer data and
information sources, unfairly discriminates based on race, color,
national or ethnic origin, religion, sex, sexual orientation,
disability, gender identity, or gender expression;
4. Provide an assessment of the res ults of the risk management
framework or similar processes or procedures and actions taken to
minimize the risk of unfair discrimination, including ongoing
monitoring; and
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5. Provide an attestation by one or more officers that the
insurer has implemented a risk management framework or similar
processes or procedures appropriately on a continuous basis.
C. The rules adopted by the Commissioner pursuant to this act
must include provisions establishing:
1. A reasonable period of time for insurers to remed y any
unfairly discriminatory impact in an algorith m or predictive model;
and
2. The ability of insurers to use external consumer data and
information sources, as well as algo rithms or predictive models
using external consumer data and information sources , that have been
previously assessed by the Department and found not to be unfairly
discriminatory.
D. Documents, materials, and other information in the
possession or control of the Oklahoma Insurance Department that are
obtained by, created by, or disclosed to the Insurance Commissioner
or any other person pursuant to this act or any rules adopted
pursuant to this act are recognized as proprietary and containing
trade secrets. All such documents, materials, a nd other information
are confidential and privileged; are not subject to disclosure under
the Oklahoma Open Records Act, or other open records, freedom of
information, sunshine, or similar law of this state; are not subject
to subpoena; and are not subject to discovery or admissible in
evidence in any private civil action. However, the Insurance
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Commissioner may use the documents, materials, or other information
in the furtherance of any regulatory or legal action brought as part
of the Commissioner's official duties. The Insurance Commissioner
shall not otherwise make the documents, materials, or other
information public without the prior written consent of the insurer
from when the documents, materials, or other information was
obtained. The Insurance Commissioner may make data publicly
available in an aggregated or de-identified format in a manner
deemed appropriate by the Commissioner.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3705 of Title 36, unless there
is created a duplication in numbering, reads as follows:
The Insurance Commissioner shall have the power to examine and
investigate an insurer 's use of an external consumer data and
information source, algorithm, or predictive model in any insurance
practice. Insurers shall cooperate with the Commissioner and the
Oklahoma Insurance Department in any examination or investigation
under this act.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3706 of Title 36, unless there
is created a duplication in numbering, r eads as follows:
Nothing in this act:
A. Requires an insurer to collect from an applicant or
policyholder the race, color, national or ethnic origin, religion,
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sex, sexual orientation, disability, gend er identity, or gender
expression of an individual; or
B. May be construed to:
1. Prohibit the use of or to require life, annuity, long-term
care, or disability insurers to test, medical, family history,
occupational, disability, or behavioral information related to a
specific individual, which information, bas ed on actuarially sound
principles, has a direct relationship to mortality, morbidity, or
longevity risk unless such information is otherwise included in the
testing of an algorithm or predictive mode l that also uses external
consumer data and information sources;
2. Prohibit the use of or to require life, annuity, long -term
care, or disability insur ers to test, traditional underwriting
factors being used for the exclusive purpose of determining
insurable interest or eligibility for coverage unless such fact ors
are otherwise included in the testing of an algorithm or predictive
model that also uses externa l consumer data and information sources;
3. Prohibit the use of or to require the testing of
longstanding and well-established common industry practices in
settling claims or traditional underwriting practices unless such
practices or factors are otherwise in cluded in the testing of an
algorithm or predictive model that also uses external consumer data
and information sources.
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SECTION 7. This act shall become effective November 1, 2022.
58-2-8942 MJ 01/13/22