Nevada's insurance department has issued a bulletin that aims to rein in insurers' use of certain analytics models.

Bulletin 17-001 "remind[s] insurers that any mathematical model used in underwriting or rating of any personal line of property and/or casualty insurance, or other line of property and/or casualty insurance subject to regulation of rates ... [must] be filed with the Division for approval."

Specifically, the bulletin defines "any underwriting rule or model used in underwriting that affects the premium that any insured would pay" falls under this requirement. The clarification pulls under the regulatory umbrella practices that related to so-called "price optimization," a controversial practice that has been banned by 19 other states and targeted by the NAIC.


The NAIC issued a whitepaper with guidance on and a sample bulletin for price optimization in late 2015. However, Nevada's bulletin takes a wider stance, instead informing insurers overall that all data and analytics models uesd in their processes must be disclosed to the insurance department.

"The proliferation of complex predictive models that some insurers have termed 'underwriting models' has led to the necessity to reiterate such requirements," the bulletin says. "Nevada’s filing and prior-approval requirements continue to apply irrespective of the complexity of the algorithms utilized by insurers or the labels given to those algorithms."

(This article appears courtesy of our sister publication, Insurance Networking News)

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