Insurance brokers using AI for quoting, risk assessment, or client recommendations face Colorado's high-risk AI classification for insurance decisions, plus potential E&O exposure if AI exclusion endorsements affect their own coverage.
Applicable Regulations
First comprehensive US state law governing high-risk AI systems. Signed May 17, 2024; compliance deadline extended to June 30, 2026 by SB 25B-004. Imposes obligations on both developers and deployers of AI systems that make or substantially influence consequential decisions affecting consumers.
Key Requirements
Impact Assessment Complete documented impact assessments annually and within 90 days of substantial modifications, covering discrimination risks, data inputs/outputs, and mitigation measures
Consumer Notice Notify consumers when a high-risk AI system makes or substantially influences a consequential decision about them
Correction & Appeal Rights Allow consumers to correct inaccurate personal data and appeal adverse decisions through human review where technically feasible
Developer Disclosure Developers must publish statements describing high-risk systems and discrimination risk management, and supply deployers documentation for impact assessments
Effective: 2026-06-30 Penalties: Enforcement by Colorado Attorney General. Violations treated as deceptive trade practices under the Colorado Consumer Protection Act.
Carrier Endorsement Details
Absolute AI exclusion for D&O, E&O, and Fiduciary Liability — eliminates coverage for any claim "based upon, arising out of, or attributable to" AI use.
Key Provisions
Absolute exclusion — no coverage for any AI-related claim
Applies to claims 'based upon, arising out of, or attributable to' AI
Covers owned, licensed, and third-party AI systems
No carve-back for incidental AI use
Type: exclusion Policies: D&O, E&O, Fiduciary
Industry Context
Insurance Brokers
Insurance brokers and agents who use AI tools for underwriting support, client risk assessment, claims processing, and policy recommendation.
Typical Compliance Gaps
No AI governance policy for underwriting tools
Lack of human oversight in AI-driven coverage recommendations
No documentation of AI vendor risk assessments
Unaware of AI exclusion endorsements in own E&O coverage
Related Questions
- Are there regulations on AI in insurance underwriting? Yes. Colorado SB 24-205 explicitly classifies AI systems used in insurance underwriting and claims decisions as high-risk, requiring impact assessments, consumer notification, and appeal rights. The Colorado Division of Insurance has issued additional guidance requiring carriers to demonstrate that AI underwriting models do not produce unfairly discriminatory outcomes. Multiple other state insurance departments — including California, New York, and Illinois — have issued AI guidance bulletins, and the NAIC has adopted model AI governance principles that many states are incorporating into their regulatory frameworks.
- What does Berkley PC 51380 exclude? Berkley PC 51380 is an absolute AI exclusion for professional and management liability (D&O, E&O, Fiduciary) that eliminates coverage for any claim based upon, arising out of, or attributable to AI use.
Disclaimer: This content is provided for informational purposes only and does not constitute legal advice. AI regulations and insurance policy terms change frequently. Consult with a qualified attorney or insurance professional for advice specific to your situation. Gridex makes no warranties regarding the accuracy or completeness of this information.