United States of America: Closed consultation on proposed Insurance Circular Letter on AI use

On 17 March 2024, the New York Department of Financial Services (NYDFS) closed a consultation on a proposed AI guidance for insurers. The Circular outlines NYDFS’s expectations towards insurers who use external consumer data and information sources (ECDIS), AI systems (AIS), and other predictive models to mitigate potential harm to consumers. NYDFS specifically highlights the risk of the self-learning tendencies of AIS resulting in unfair or unlawful discrimination towards vulnerable communities in the insurance market. Insurers are expected to analyse ECDIS and AIS for unfair and unlawful discrimination through documentation, frequent testing, quantitative and qualitative assessments, show the validity of ECDIS and AIS, maintain a corporate governance framework for oversight of ECDIS and AIS use, and implement appropriate transparency, risk management, and internal controls.