Insurtech Regs, 'Dark Pattern' Spottting on NAIC's To-Do List

A consumer group wants state insurance regulators to give agents and consumers more information about how well insurers pay claims.

The Center for Economic Justice told the National Association of Insurance Commissioners that states should make public company-level data from the Market Conduct Annual Statements that states already collect.

“While consumers are routinely exhorted to shop based on factors other than price, there is little or no usable information for consumers regarding the actual performance of insurers regarding consumers,” the center said.

Posting company market conduct data would help consumers find out how long an insurer takes to settle a claim, how often an insurer denies claims and how often consumers file lawsuits in an effort to collect benefits, the center said.

The center asked the NAIC´s Market Regulation and Consumer Affairs Committee to look at the benefits and costs of public access to insurers’ market conduct reports.

At a session Thursday at the NAIC´s fall national meeting in Tampa, Florida, the committee declined to add the disclosure project to its list of 2023 charges.

Dark Patterns

In August, Birny Birnbaum, the executive director of the Center for Economic Justice, asked the Market Regulation committee to train analysts to detect “dark patterns” and to define dark patterns as an unfair and deceptive trade practice.

The term “dark patterns” refers to techniques an online service can use to get consumers to do things they would otherwise not do, according to draft August meeting notes included in the committee’s fall national meeting packet.

Dark pattern techniques include nagging; efforts to keep users from understanding and comparing prices; obscuring important information; and the “roach motel” strategy, which makes signing up for an online service much easier than canceling it.

Artificial Intelligence and Machine Learning

Insurance technology companies and their advisors want the NAIC to develop uniform rules for artificial intelligence and machine learning technology.

The American InsurTech Council held a breakfast briefing on the topic at the NAIC meeting Wednesday.

The NAIC’s Innovation and Cybersecurity and Technology Committee is working on a regulatory governance framework for the technologies.

Scott Harrison, the co-founder of the council, said in an interview that developing the framework is critically important both for insurers and for technology services vendors.

Because of the slump in the overall technology startup funding sector, “investors are getting more choosy,” Harrison said Thursday.

But the venture capital climate for insurtech startups continues to be strong, and many firms are working on insurance-related artificial intelligence and machine learning efforts, he said.

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