Workforce Bulletin

On July 11, 2024, after considering comments from insurers, trade associations, advisory firms, universities, and other stakeholders, the New York State Department of Financial Services (NYSDFS) issued its Final Circular Letter regarding the “Use of Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing” (“Final Letter.”) By way of background, NYSDFS published its Proposed Circular Letter (“Proposed Letter”) on the subject in January 2024. As we noted in our February blog, the Proposed Letter called on insurers and others in the state of New York, using external consumer data and information sources (“ECDIS”) and artificial intelligence systems (“AIS”), to assess and mitigate bias, inequality, and discriminatory decision making or other adverse effects in the underwriting and pricing of insurance policies. While NYSDFS recognized the value of ECDIS and AI in simplifying and expediting the insurance underwriting process, the agency—following current trends—wanted to mitigate the potential for harm. 

And if the opening section of the Final Letter is any indication, the agency did not back down. It continued to insist, for example, that senior management and boards of directors “have a responsibility for the overall outcomes of the use of ECDIS and AIS”; and that insurers should conduct “appropriate due diligence and oversight” with respect to third-party vendors. NYSDFS declined to define “unfair discrimination” or “unlawful discrimination,” noting that those definitions may be found in various state and federal laws dealing with insurance and insurers.