AI governance for Pennsylvania insurers
The Pennsylvania Insurance Department issued Insurance Notice 2024-04 (54 Pa.B. 1910) on April 6, 2024, adopting the NAIC Model Bulletin on the Use of AI Systems by Insurers. It reminds insurers that any decision or action affecting consumers must comply with Pennsylvania insurance law, including the laws on unfair trade practices and unfair discrimination, regardless of whether an AI system supported the decision. The notice expects each insurer to maintain a written AIS Program sized to the risk of adverse consumer outcomes, and it reaches the full insurance life cycle, from product development through underwriting, claims, and fraud detection. It recognizes the NAIC's 2020 Principles on Artificial Intelligence as an appropriate source of guidance.
What Pennsylvania expects from your AIS Program
Pennsylvania adopted the NAIC model with some changes. The four pillars below are the shared foundation.
Governance
A written program with clear ownership. Senior management is accountable to the board, and a cross-functional body oversees AI across its whole life cycle.
Risk Management & Internal Controls
Controls at every stage of the model life cycle, from data sourcing through retirement, sized to the potential harm to consumers.
Third-Party AI Systems & Data
The insurer stays responsible for AI it did not build. Vendor relationships need diligence, contract rights, and the ability to produce evidence.
Documentation & Audit-Readiness
Section 4 spells out what an examiner can ask for. Treating that list as a standing requirement is what keeps a program defensible.
Legal authority
The Pennsylvania Insurance Department grounds the bulletin in laws it already enforces:
- Unfair Insurance Practices Act40 P.S. §§ 1171.1 to 1171.15
- Casualty and Surety Rate Regulatory Act40 P.S. §§ 1181 to 1199
- Corporate Governance Annual Disclosure40 Pa.C.S. §§ 3901 to 3911
Who it applies to
The bulletin reaches every entity holding a Pennsylvania certificate of authority, including:
- Property and casualty insurers
- Life and annuity insurers
- Health insurers, HMOs, and PPOs
- All other entities holding a Pennsylvania certificate of authority
State-specific changes: Pennsylvania tracks the NAIC model and expressly allows the AIS Program to adopt, incorporate, or rely on a recognized framework such as the NIST AI Risk Management Framework v1.0. The core program expectations match the national framework.
Resources for Pennsylvania insurers
Start with these plain-language explainers and field guides.
What is the NAIC Model Bulletin on AI?
The NAIC Model Bulletin on the Use of AI Systems by Insurers is the template most states use to set AI governance expectations. Here is what it says and why it matters.
GuideWhat is an AIS Program?
An AI Systems Program (AIS Program) is the written program the NAIC Model Bulletin expects every insurer to maintain. Here are its four pillars and what each one requires.
GuideWhat are the NAIC AI Principles?
The NAIC AI Principles, adopted in 2020, are the foundation beneath every state AI bulletin. The five principles spell FACTS: Fair, Accountable, Compliant, Transparent, and Secure.
GuideAI in Insurance: Key Regulatory Definitions
The NAIC Model Bulletin defines the terms that carry legal weight, from AI System to Adverse Consumer Outcome to Model Drift. Here is what each one means for insurers.
ArticleInsurance Regulators Are Forcing AI Governance. Most Carriers Aren't Ready.
State insurance regulators and bar associations are sounding the alarm on AI in insurance. Legal and regulatory pressure is forcing insurers to operationalize AI governance, not just document it.
ArticleThe NAIC Bulletin Is the Floor Your Reinsurer Will Hold You To
Twenty-four jurisdictions have adopted the NAIC Model Bulletin on AI. Most carrier compliance teams are working to the regulatory text. Their reinsurers will use the same document as an evidentiary baseline at the next placement, and the cedent that meets the floor and stops there is preparing for the wrong audience.
Pennsylvania AI governance FAQs
What is Pennsylvania Insurance Notice 2024-04?
Which companies have to comply in Pennsylvania?
Can our AIS Program use the NIST AI Risk Management Framework?
How will Pennsylvania enforce it?
How does a Pennsylvania insurer get ready?
Sources
- Pennsylvania Insurance Department: Insurance Notice 2024-04 (54 Pa.B. 1910, April 6, 2024)
- Pennsylvania Insurance Department: guidance announcement (April 2024)
- NAIC Model Bulletin on the Use of AI Systems by Insurers (Dec 4, 2023)
- 40 P.S. §§ 1171.1 to 1171.15 (Unfair Insurance Practices Act)
- 40 P.S. §§ 1181 to 1199 (Casualty and Surety Rate Regulatory Act)
- 40 Pa.C.S. §§ 3901 to 3911 (Corporate Governance Annual Disclosure)
Get audit-ready for Pennsylvania Notice 2024-04
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