Department Of Business Regulation
If enacted, HB 5734 will create new regulations around how insurers can use external consumer data. It mandates a stakeholder process that includes various parties such as insurers, producers, consumer representatives, and other interested stakeholders in developing the rules that enforce these provisions. The bill's implications extend to the insurance industry's operational standards, compelling insurers to demonstrate that their practices do not lead to adverse discrimination. Such provisions aim to enhance transparency and accountability within the insurance sector, potentially reshaping how data is utilized in risk assessments and insurance pricing.
House Bill 5734, introduced by Representative Joseph M. McNamara, seeks to amend the Rhode Island General Laws concerning the Department of Business Regulation. The primary focus of this bill is to prohibit insurers from using external consumer data and information sources, as well as algorithms and predictive models that result in unfair discrimination in insurance practices based on various sociodemographic attributes. The proposed legislation stipulates that insurers must not unfairly discriminate against individuals based on race, color, national origin, religion, sex, sexual orientation, disability, gender identity, or gender expression. The bill emphasizes fair treatment and equity in insurance practices by ensuring that the tools used for underwriting and pricing do not introduce bias.
Despite the bill's goals of fairness, it may face contention regarding the balance between regulation and the operational freedoms of insurers. Industry representatives could argue that the limitations placed on using external data sources could restrict their ability to accurately assess risk and set premiums competitively. Additionally, the requirement for insurers to adhere to a stakeholder process prior to the implementation of regulations might lead to concerns about compliance burdens and the potential for litigation related to data usage. Consequently, there could be pushback from some quarters of the insurance community who view such regulations as overly restrictive.