NYDFS CL 7 (2024) — Insurance AI Anti-Discrimination

NYDFS Insurance Circular Letter No. 7 (2024), issued July 11, 2024. Scope: all insurers licensed in New York across all lines (life, health, P&C, title). Applies to insurer use of Artificial Intelligence Systems (AIS) and External Consumer Data and Information Sources (ECDIS) in underwriting and pricing decisions. Key requirements: (1) Proxy Assessment — insurer may not use ECDIS/AIS in underwriting or pricing unless it completes a comprehensive assessment demonstrating the use does not produce an unfair or unlawful discriminatory effect based on protected class attributes, including proxy discrimination; (2) Adverse Action Notice — if an AIS or ECDIS contributes to an adverse underwriting decision, insurer must provide written notice to applicant within 15 days, including the specific ECDIS used and reasons for the decision; (3) Governance and Documentation — insurers must maintain records of their testing methodology and proxy-assessment results, commensurate with complexity and materiality of use; records available to DFS on request; (4) DFS Market Conduct — DFS may examine insurer AI practices under existing market-conduct authority. Does not require new legislation (issued under existing Insurance Law unfair discrimination provisions). Issued January 17, 2024 as proposed guidance; finalized July 11, 2024. Distinct from the NAIC Model Bulletin adopted by 25+ states: NYDFS CL No. 7 adds the proxy-discrimination assessment prohibition and mandatory adverse-action notice not present in the NAIC bulletin.