NAIC Working Group Begins Sculpting a Framework to Assess Third-Party Data and Models

After taking a brief hiatus since the 2024 Fall National Meeting, the National Association of Insurance Commissioners’ Third-Party Data and Models (H) Working Group began shaping its focus. Based on a regulatory survey of current state frameworks, issues to be solved, and the definition of “third party,” the group began developing a framework to assess third-party data and models. This framework would address the following problems:

• The inability to assess the fairness of insurers’ data and model use, including potential unfair discrimination and verification of model outputs.
• Limited governance and oversight of how third-party models and data are tested, controlled, and monitored.
• The inability to determine whether rates are excessive, inadequate, or unfairly discriminatory when third-party models or data are used.

To model the sculpture, the group is working to define “third party” and intends to use existing NAIC definitions as a point of reference. The group also received input from regulators and interested parties. For its August 13 meeting, the working group assembled the input received on:

• Who should be included in or excluded from the definition of a third-party vendor.
• The functions data providers serve.
• What should be included in or excluded from the definition of third-party data.
• Whether the definitions apply to specific insurers or all insurers.

Which insurer operations should be included and excluded. With this input, the working group hopes to create a maquette — working definitions for its framework.

This article was co-authored by Carlton Fields law clerk Jake Heiges.