A month-and-a-half after the NAIC adopted a model bulletin on carriers’ use of Artificial Intelligence Systems, the New York Department of Financial Services issued a circular letter on the “Use of Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing.”

The document, like the NAIC bulletin, sets forth expectations for governance, risk management and internal controls related to the use of AI System and consumer data (ECDIS). Beyond that, the New York circular, which is specifically focused squarely on the two P/C insurance operations of pricing and underwriting, sets forth “Fairness Principles” regarding “actuarial validity” of data, and details the department’s expectations that insurers will perform both quantitative testing and qualitative assessments for unfair or unlawful discrimination in the data or models.

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