The American InsurTech Council (AITC) has raised concerns about the current direction of the National Association of Insurance Commissioners’ (NAIC) Third-Party Data and Models Working Group, questioning both the relevance of the issues under review and the need for introducing new definitions.
During its May session, the NAIC working group initiated a public comment period on proposed definitions related to third-party data and model vendors.
The AITC submitted its formal response before the June 20 deadline. Regulators at the May meeting discussed how the collection timing, method, and source of data could influence regulatory treatment.
One point highlighted was the distinction between government-provided data, which falls under different legal frameworks than private-sector data.
Regulators also debated whether data from social media sources should be restricted or treated differently, and how to clearly separate third-party entities from insurers’ affiliates or holding companies.
The AITC urged the working group to first clarify the issues before continuing discussions on terminology.
According to the trade group, existing definitions already embedded in state insurance laws and guidance—such as those found in model bulletins and AI principles—should remain in place.
The group argued that the rationale for creating new definitions remains unclear and questioned whether they would offer additional oversight benefits beyond what current law allows.
Scott Harrison, AITC co-founder, warned in his letter that imposing strict definitions could disrupt the flexible and innovative services third-party providers bring to the insurance sector. He also cited potential compliance issues and new regulatory barriers that may arise from adopting new terminology.
Based upon the results of our review, it is not clear why these terms require new definitions, or how definitions could meaningfully add to the authority to oversee insurer use of AI that already exists under state law.
Scott Harrison, co-founder of the American InsurTech Council
However, if the NAIC working group ultimately chooses to proceed with defining the term, the AITC proposed a definition based on current insurance practices: “Third-party data or model vendor” means a person, partnership, corporation, or other entity that provides external consumer data, an algorithm, or a predictive model to an insurer for use in an insurance practice, but does not include an employee or affiliate of the insurer.
