Michigan Bulletin Provides Guidance for AI Use in Financial Services

The Michigan Department of Insurance and Financial Services issued a bulletin to provide guidance to financial service providers on the use of artificial intelligence.

The bulletin says that financial service providers including insurers are expected to develop, implement, and maintain a written AI Systems Program (AIS Program), which should be designed to mitigate the risk of adverse consumer outcomes.

“AI may facilitate the development of innovative products, improve consumer interface and service, simplify and automate processes, and promote efficiency and accuracy, the bulletin says. “Nevertheless, AI, including AI Systems, can present unique risks, including the potential for inaccuracy, unfair discrimination, data vulnerability, lack of transparency, and inability to map decision processes.”

The bulletin gives general outlines for the development of AIS programs. The programs should address governance, risk management controls, and internal audit functions, the bulletin says.

“Artificial Intelligence is changing the financial services industry, and financial services entities should ensure that the use of any AI systems complies with federal and state laws and regulations while prioritizing consumer protection,” said DIFS Director Anita Fox. “This new bulletin outlines DIFS’ expectations and identifies issues financial services providers should consider when using AI systems.”