"New York has a strong track record of supporting responsible innovation while protecting consumers from financial harm,” said Superintendent Harris. “Today’s guidance builds on that legacy, ensuring that the implementation of AI in insurance does not perpetuate or amplify systemic biases that have resulted in unlawful or unfair discrimination, while safeguarding the stability of the marketplace.”

The use of external consumer data and information sources (“ECDIS”) and artificial intelligence systems (“AIS”) can benefit insurers and consumers by simplifying and expediting insurance underwriting and pricing processes, however, it is critical that insurers who utilize such technologies establish a proper governance and risk management framework to mitigate the potential harm to consumers.

The guidance outlines DFS’s expectations for how all insurers authorized to write insurance in New York State develop and manage the integration of ECDIS, AIS, and other predictive models. Pursuant to DFS’s guidance, insurers are expected to:

analyze ECDIS and AIS for unfair and unlawful discrimination, as defined in state and federal laws;demonstrate the actuarial validity of ECDIS and AIS;maintain a corporate governance framework that provides appropriate oversight of the insurer’s overall outcome of the use of ECDIS and AIS; and maintain appropriate transparency, risk management, and internal controls, including over third-party vendors and consumer disclosures.

DFS has finalized the guidance with careful consideration of the valuable feedback received from regulated entities and other key stakeholders, including trade associations, advisory firms, universities, and the broader public.

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.