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28	28	STATE OF OKLAHOMA
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30	30	2nd Session of the 58th Legislature (2022)
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32	32	HOUSE BILL 3186 By: Phillips
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38	38	AS INTRODUCED
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40	40	An Act relating to insurance; enacting the Insurance
41	41	Consumer Rights Act; defining terms; prohibiting
42	42	discrimination by insurers; prohibiting the use of
43	43	algorithms and predictive models that unfairly
44	44	discriminate; directing Insurance Commissioner to
45	45	adopt rules; directing process for rule creation;
46	46	directing use of necessary provisions; permitting
47	47	Insurance Commissioner to investigate; clarifying
48	48	applicability of act; providing for codification; and
49	49	providing an effective date .
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54	54	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
55	55	SECTION 1. NEW LAW A new section of law to be codified
56	56	in the Oklahoma Statutes as Section 3701 of Title 36, unless there
57	57	is created a duplication in numbering, reads as follows:
58	58	This act shall be known and may be cited as the "Insurance
59	59	Consumer Rights Act".
60	60	SECTION 2. NEW LAW A new sect ion of law to be codified
61	61	in the Oklahoma Statutes as Section 3702 of Title 36, unless there
62	62	is created a duplication in numbering, reads as follows:
63	63	As used in this act, unless the context other wise requires:
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90	90	1. "Algorithm" means a computational or machine learning
91	91	process that informs human decision-making in insurance practices;
92	92	2. "External consumer data and information source " means a data
93	93	or an information source that is used by an insurer to supplement
94	94	traditional underwriting or other insuran ce practices or to
95	95	establish lifestyle indicators that are used in insurance practices.
96	96	External consumer data and information sources include credit
97	97	scores, social media habits, locations, purchasing habits, home
98	98	ownership, educational attainment, occupation, licensures, civil
99	99	judgments, and court records. The Insurance Commissioner may
100	100	promulgate rules to further define external consumer data and
101	101	information source for particular lines of insurance and insurance
102	102	practices;
103	103	3. "Insurance practice" means marketing, underwriting, pricing,
104	104	utilization management, reimbursement methodologies, and claims
105	105	management in the transaction of insurance ;
106	106	4. "Predictive model" means a process of using mathematical and
107	107	computational methods that examine current and historical data sets
108	108	for underlying patterns and to calculate the probability of an
109	109	outcome;
110	110	5. "Unfairly discriminate " and "unfair discrimination" include
111	111	the use of one or more external consumer data and information
112	112	sources, as well as algorithms or pred ictive models using external
113	113	consumer data and information sources, that have a correlation to
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140	140	race, color, national or ethnic origin, r eligion, sex, sexual
141	141	orientation, disability, gender identity, or gender expression, and
142	142	that use results in a dispropor tionately negative outcome for such
143	143	classification or classifications, which negative outcome exceeds
144	144	the reasonable correlation to the under lying insurance practice,
145	145	including losses, and costs for underwriting.
146	146	SECTION 3. NEW LAW A new section of law to be codified
147	147	in the Oklahoma Statutes as Section 3703 of Title 36, unless there
148	148	is created a duplication in numbering, reads as follows:
149	149	Insurers shall not, with regard to any insurance practice :
150	150	A. Unfairly discriminate based on ra ce, color, national or
151	151	ethnic origin, religion, sex, sexual orientation, disability, gender
152	152	identity, or gender expression; o r
153	153	B. Pursuant to rules adopted by the Insurance Commissioner, use
154	154	any external consumer data and information so urces, or any
155	155	algorithms or predictive models that use external consumer data and
156	156	information sources, in a way that unfairly discriminates based on
157	157	race, color, national or ethnic origin, religion, sex, sexual
158	158	orientation, disability, gender identity, or gender expression.
159	159	SECTION 4. NEW LAW A new section of law to be codified
160	160	in the Oklahoma Statutes as Section 3704 of Title 36, unless there
161	161	is created a duplication in numbering, reads as follows:
162	162	A. 1. The Insurance Commissioner sh all adopt rules for the
163	163	implementation of this act.
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190	190	2. The Insurance Commissioner shall engage in a stakeholder
191	191	process prior to the adoption of rules for any type of insurance
192	192	that includes carriers, producers, consumer representatives, and
193	193	other interested parties. The Commissioner shall hold stakeholder
194	194	meetings for stakeholders of different types of insurance to ensure
195	195	sufficient opportunity to consider factors and processes relevant to
196	196	each type of insurance. The Commissioner shall provide notice of
197	197	stakeholder meetings on the agency website. Stakeholder meetings
198	198	shall be open to the public.
199	199	B. After the stakeholder process described in paragraph 2 of
200	200	subsection A of this section, the Insurance Commissioner shall adopt
201	201	rules for specific types of insurance, by insu rance practice, which
202	202	rules establish the means by which an insurer may demonstrate, to
203	203	the extent practicable, that it has tested whether its use of
204	204	external consumer data and informati on sources, as well as
205	205	algorithms or predictive models using external cons umer data and
206	206	information sources, unfairly di scriminates based on race, color,
207	207	national or ethnic origin, religion, sex, sexual orientation,
208	208	disability, gender identity, or gender expre ssion. The rules shall
209	209	become effective January 1, 2023, at the earliest, for any type of
210	210	insurance, and the Commissioner shall consider solvency impacts, if
211	211	any, to insurers in adopting the rules.
212	212	C. Rules adopted pursuant to this act shall require each
213	213	insurer to:
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240	240	1. Provide information to the Insurance Commissioner concerning
241	241	the external consumer data and information sources used by the
242	242	insurer in the development and implementation of algorithms and
243	243	predictive models for a particular type of insurance and insurance
244	244	practice;
245	245	2. Provide an explanation of the m anner in which the insurer
246	246	uses external consum er data and information sources, as well as
247	247	algorithms and predictive models using external consumer data and
248	248	information sources, for the particular type of insurance and
249	249	insurance practice;
250	250	3. Establish and maintain a risk management framework or
251	251	similar processes or procedures that are reasonably designed to
252	252	determine, to the extent practicable, whether the insurer 's use of
253	253	external consumer data and information sources, as well as
254	254	algorithms and predictive models using external consumer data and
255	255	information sources, unfairly discriminates based on race, color,
256	256	national or ethnic origin, religion, sex, sexual orientation,
257	257	disability, gender identity, or gender expression;
258	258	4. Provide an assessment of the res ults of the risk management
259	259	framework or similar processes or procedures and actions taken to
260	260	minimize the risk of unfair discrimination, including ongoing
261	261	monitoring; and
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288	288	5. Provide an attestation by one or more officers that the
289	289	insurer has implemented a risk management framework or similar
290	290	processes or procedures appropriately on a continuous basis.
291	291	C. The rules adopted by the Commissioner pursuant to this act
292	292	must include provisions establishing:
293	293	1. A reasonable period of time for insurers to remed y any
294	294	unfairly discriminatory impact in an algorith m or predictive model;
295	295	and
296	296	2. The ability of insurers to use external consumer data and
297	297	information sources, as well as algo rithms or predictive models
298	298	using external consumer data and information sources , that have been
299	299	previously assessed by the Department and found not to be unfairly
300	300	discriminatory.
301	301	D. Documents, materials, and other information in the
302	302	possession or control of the Oklahoma Insurance Department that are
303	303	obtained by, created by, or disclosed to the Insurance Commissioner
304	304	or any other person pursuant to this act or any rules adopted
305	305	pursuant to this act are recognized as proprietary and containing
306	306	trade secrets. All such documents, materials, a nd other information
307	307	are confidential and privileged; are not subject to disclosure under
308	308	the Oklahoma Open Records Act, or other open records, freedom of
309	309	information, sunshine, or similar law of this state; are not subject
310	310	to subpoena; and are not subject to discovery or admissible in
311	311	evidence in any private civil action. However, the Insurance
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338	338	Commissioner may use the documents, materials, or other information
339	339	in the furtherance of any regulatory or legal action brought as part
340	340	of the Commissioner's official duties. The Insurance Commissioner
341	341	shall not otherwise make the documents, materials, or other
342	342	information public without the prior written consent of the insurer
343	343	from when the documents, materials, or other information was
344	344	obtained. The Insurance Commissioner may make data publicly
345	345	available in an aggregated or de-identified format in a manner
346	346	deemed appropriate by the Commissioner.
347	347	SECTION 5. NEW LAW A new section of law to be codified
348	348	in the Oklahoma Statutes as Section 3705 of Title 36, unless there
349	349	is created a duplication in numbering, reads as follows:
350	350	The Insurance Commissioner shall have the power to examine and
351	351	investigate an insurer 's use of an external consumer data and
352	352	information source, algorithm, or predictive model in any insurance
353	353	practice. Insurers shall cooperate with the Commissioner and the
354	354	Oklahoma Insurance Department in any examination or investigation
355	355	under this act.
356	356	SECTION 6. NEW LAW A new section of law to be codified
357	357	in the Oklahoma Statutes as Section 3706 of Title 36, unless there
358	358	is created a duplication in numbering, r eads as follows:
359	359	Nothing in this act:
360	360	A. Requires an insurer to collect from an applicant or
361	361	policyholder the race, color, national or ethnic origin, religion,
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388	388	sex, sexual orientation, disability, gend er identity, or gender
389	389	expression of an individual; or
390	390	B. May be construed to:
391	391	1. Prohibit the use of or to require life, annuity, long-term
392	392	care, or disability insurers to test, medical, family history,
393	393	occupational, disability, or behavioral information related to a
394	394	specific individual, which information, bas ed on actuarially sound
395	395	principles, has a direct relationship to mortality, morbidity, or
396	396	longevity risk unless such information is otherwise included in the
397	397	testing of an algorithm or predictive mode l that also uses external
398	398	consumer data and information sources;
399	399	2. Prohibit the use of or to require life, annuity, long -term
400	400	care, or disability insur ers to test, traditional underwriting
401	401	factors being used for the exclusive purpose of determining
402	402	insurable interest or eligibility for coverage unless such fact ors
403	403	are otherwise included in the testing of an algorithm or predictive
404	404	model that also uses externa l consumer data and information sources;
405	405	3. Prohibit the use of or to require the testing of
406	406	longstanding and well-established common industry practices in
407	407	settling claims or traditional underwriting practices unless such
408	408	practices or factors are otherwise in cluded in the testing of an
409	409	algorithm or predictive model that also uses external consumer data
410	410	and information sources.
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437	437	SECTION 7. This act shall become effective November 1, 2022.
438	438
439	439	58-2-8942 MJ 01/13/22

Oklahoma 2022 Regular Session

Oklahoma House Bill HB3186 Compare Versions