DFS Superintendent Harris Proposes Artificial Intelligence Guidance to Combat Discrimination

Circular Letter Applies to All Insurers Authorized to Write Insurance in New York State

Today Superintendent of Financial Services Adrienne A. Harris issued for public comment a proposed circular letter addressing the use of artificial intelligence by licensed insurers.

“Technological advances that allow for greater efficiency in underwriting and pricing should never come at the expense of consumer protection,” said Superintendent Harris. “DFS has a responsibility to ensure that the use of AI in insurance will be conducted in a way that does not replicate or expand existing systemic biases that have historically led to unlawful or unfair discrimination.” 

The circular letter outlines DFS’s expectations for how insurers develop and manage the integration of external consumer data and information sources (“ECDIS”), artificial intelligence systems (“AIS”), and other predictive models to mitigate potential harm to consumers. Insurers are expected to: 

  • analyze ECDIS and AIS for unfair and unlawful discrimination;
  • demonstrate the actuarial validity of ECDIS and AIS;
  • maintain a corporate governance framework that provides appropriate oversight of the insurer’s use of ECDIS and AIS; and 
  • maintain appropriate transparency, risk management, and internal controls.

DFS recognizes that AIS and ECDIS can simplify underwriting and pricing and potentially make them more accurate. However, the self-learning behavior of AIS may also increase the risks of unfair or unlawful discrimination in violation of the Insurance Law, which may disproportionately impact vulnerable communities or otherwise undermine the New York insurance market.

Today’s announcement builds upon Governor Hochul’s first-ever statewide policy governing AI and commitment to making New York a leader in cutting-edge technology development and use.

DFS is soliciting comments from the industry and the public on today’s proposed circular letter until March 17, 2024.  A copy of the AI circular letter is available on the DFS website.

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