New York · New York Department of Financial Services
New York DFS Circular Letter No. 7 (2024): Use of Artificial Intelligence Systems and External Consumer Data in Insurance Underwriting and Pricing
New York is the most prescriptive. DFS Circular Letter No. 7 (July 11, 2024) tells insurers how it expects them to manage AI systems and external consumer data in underwriting and pricing: test for unfair or unlawful discrimination using multiple statistical metrics, follow a three-step disparate-impact analysis, search annually for less-discriminatory alternatives, and retain full responsibility for third-party tools. DFS also expects insurers to disclose the use of AI when adverse decisions are made.
What it covers
New York DFS Circular Letter No. 7 (2024) sets expectations for insurers authorized in New York that use external consumer data and information sources (ECDIS) and AI systems in underwriting and pricing. Insurers are expected to demonstrate that such use does not result in unfair or unlawful discrimination, supported by a comprehensive assessment that includes quantitative testing across multiple statistical metrics.
The circular letter describes a disparate-impact analysis: identify whether outcomes differ for protected classes, assess whether a legitimate rationale exists, and search for a less-discriminatory alternative that meets the same objective. This search is expected on an ongoing, at least annual, basis. Insurers retain full responsibility for AI systems and data obtained from third-party vendors, and are expected to disclose the use of ECDIS and AI systems to consumers when adverse decisions are made.
MandateMap stages primary regulatory information and does not provide legal or compliance advice. Verify against the linked primary source and consult qualified counsel.