Navigating Colorado SB21‑169: An Action-Oriented Approach to Insurance Compliance
When insurance regulations evolve, compliance professionals are right to ask: What does it mean for my business? Colorado SB21‑169 isn’t just another policy update - it's a shift toward demonstrable fairness, data transparency, and heightened accountability for algorithms, models, and external data in insurance.
That’s where Praxi AI steps in.
Why SB21‑169 Compliance Matters
SB21‑169 seeks to eliminate unfair discrimination from insurance decision-making by scrutinizing how insurers use external consumer data, algorithms, and predictive models.
The regulation requires companies to rigorously test and document their processes, providing transparency and fairness across marketing, underwriting, pricing, and claims.
What’s at Stake?
License Suspension or Revocation: Noncompliance can jeopardize your company’s ability to operate.
Financial & Reputational Risk: Civil penalties aside, public scrutiny of unfair practices can undermine years of customer trust.
Expanding National Focus: Colorado’s regulation is part of a growing national movement toward algorithmic accountability.
Why Now?
The urgency is real. Life and Health insurers must already comply. For Private Passenger Auto, mandates take effect starting February 2024. Proactivity is critical.
Are You Ready? Your SB21‑169 Checklist
A streamlined, practical approach to compliance starts here. Ensuring your organization is prepared requires careful attention to these core requirements, including staying updated on regulatory changes, implementing effective policies, and providing regular training for your team.
By addressing these areas, you can build a solid foundation for compliance and reduce potential risks..
Catalog Every Data Source
Start by maintaining a current and detailed inventory of all external consumer data and information sources (ECDIS). This includes identifying where data is collected, how it's stored, and who has access to it. A thorough, up-to-date catalog ensures transparency and helps reduce data management risks.
Perform Bias Tests - Regularly
Conduct regular statistical analyses, such as custom regression tests, to identify disparities in outcomes based on race, ethnicity, or other protected characteristics. This proactive step is crucial for uncovering hidden biases and addressing inequities within your systems or decision-making processes.
Set and Monitor Bias Thresholds
Establish clear bias thresholds, such as flagging disparities greater than 5 percentage points. Continuously monitor for deviations beyond these thresholds and take immediate action to investigate and implement remediation plans if needed. This ensures your organization remains fair and equitable in its practices.
Strengthen Policy Governance
Develop and maintain robust risk management frameworks and ensure there is clear governance in place. Draft board-level attestations to demonstrate accountability and alignment with regulatory expectations. This step builds trust and reinforces organizational integrity.
Prepare Documentation On Demand
Always have compliance evidence at your fingertips. This includes audit-ready policy documents, risk assessment results, and remediation records. Readily accessible documentation not only keeps you prepared for audits but also demonstrates a commitment to compliance and transparency.
By addressing these essential requirements, your organization can confidently navigate compliance complexities and foster trust among stakeholders.
Making Compliance Work: How Praxi AI Accelerates Results
Staying compliant isn’t just about ticking boxes - it’s about building resilient systems that adapt as rules evolve. Here’s how Praxi AI’s platform translates requirements into practical solutions for your compliance, data, and leadership teams:
Discover Disparities Before Regulators Do
Run custom bias tests with tunable thresholds.
Praxi automates statistical testing, flagging differences as soon as they cross materiality limits - so you stay ahead of auditors.
Document and Attest with Confidence
Auto-generate board-level attestations and audit documentation.
Robust policy artifacts make executive sign-off a breeze, while every step is logged for regulatory review.
Monitor Risk in Real Time
Live dashboards deliver a continuous compliance pulse.
See where you stand, what’s trending, and what needs urgent attention - right when you need it.
Streamline Remediation and Team Workflows
Assign tasks, escalate issues, and track progress in one place.
When disparities are found, Praxi helps triage and execute remediation without manual chaos.
“Praxi AI cut our bias-testing cycle in half, giving us peace of mind before every external deadline.”
Who Benefits from Proactive Compliance?
Compliance Teams: Automates bias-testing and generates actionable insights, reducing workload and ensuring consistent accuracy.
HR Departments: Supports fair hiring practices by identifying biases in assessments and recruitment workflows.
Legal Teams: Provides traceable data and evidence for audits, ensuring regulatory compliance and minimising legal risks.
Executives: Offers clear dashboards and real-time compliance updates to simplify decision-making and risk management.
IT Professionals: Streamlines integrations with existing systems, ensuring data security and smooth workflow processes.
How Praxi AI Ensures Compliance
Test Engine for Bias Detection
Custom regression algorithms to uncover unfair patterns.
Automated percent-difference alerts above 5 pp thresholds.
Automated Governance Flows
Comprehensive ECDIS inventory management.
Assign tasks to risk owners and escalate issues with built-in workflows.
Remediation and Attestation Support
Cut remediation time with issue triage and automated action planning.
Generate officer-level attestations seamlessly from user-friendly dashboards.
Continuous Monitoring and Alerts
Real-time dashboards to track regulatory risk posture.
Re-test schedules automatically update with each new data set.
> FAQs
Who needs to comply with SB21‑169?
All insurance carriers operating in Colorado must comply with SB21‑169 if they use external data sources, algorithms, or predictive models for any purpose related to marketing, underwriting, pricing, or claims management.
This includes not just large insurance companies but also smaller carriers that leverage technology to streamline these processes. Ensuring compliance is essential to avoid penalties and maintain trust with regulators and consumers.
What counts as unfair discrimination under the law?
Unfair discrimination occurs when statistical analysis reveals significant disparities in outcomes based on demographic characteristics such as race, ethnicity, gender, or other protected categories.
For example, if individuals from certain demographic groups face higher premiums or lower approval rates without a legitimate business reason based on risk, this would be considered discriminatory.
Regulators take these issues seriously and closely examine results to identify any unintentional biases that may exist within an insurer's models or practices.
How often should we conduct compliance checks?
Under SB21‑169, regular compliance checks are not only recommended but required. Carriers must conduct thorough audits of their data sources, algorithms, and predictive models to ensure they meet the standards of fairness and non-discrimination.
Annual attestation filings to the Division of Insurance are mandatory, but more frequent checks - such as quarterly or after any updates to data sources or models - are strongly advised.
Proactive monitoring helps identify potential issues early, ensuring compliance and protecting the company from regulatory actions or reputational damage.
Ready to elevate your compliance?
As the insurance industry continues to evolve, staying compliant with changing regulations is crucial for companies to maintain customer trust and avoid potential penalties.
With Praxi AI as a partner, you can feel confident in your compliance efforts and focus on providing top-notch services to your clients. Our team of experts brings years of experience working with insurance companies and navigating complex regulatory requirements.