NY State Fights AI Bias in Insurance: A Stand Against Discrimination.
Published Date: 12/07/2024
The New York Department of Financial Services has adopted new guidance to combat discrimination in insurance underwriting and pricing using artificial intelligence.
The New York Department of Financial Services (DFS) has taken a significant step towards ensuring fairness and transparency in the insurance industry. Superintendent Adrienne A. Harris has adopted new guidance to protect consumers from unfair or unlawful discrimination by insurers using artificial intelligence (AI) in underwriting and pricing.
The use of AI in insurance can bring about numerous benefits, including simplified and expedited underwriting and pricing processes. However, there is a growing concern that the use of external consumer data and information sources (ECDIS) and AI systems (AIS) can perpetuate or amplify systemic biases, leading to unlawful or unfair discrimination.
To address this issue, the DFS has outlined specific expectations for insurers authorized to write insurance in New York State. Insurers are expected to analyze ECDIS and AIS for unfair and unlawful discrimination, demonstrate the actuarial validity of these systems, and maintain a corporate governance framework that provides appropriate oversight of the insurer's overall outcome of the use of ECDIS and AIS.
Additionally, insurers are required to maintain appropriate transparency, risk management, and internal controls, including over third-party vendors and consumer disclosures. The DFS has finalized the guidance after careful consideration of feedback received from regulated entities, trade associations, advisory firms, universities, and the broader public.
This announcement is a significant milestone in the state's efforts to combat discrimination and promote responsible innovation. As Superintendent Harris noted.
FAQS:
Q: What is the purpose of the new guidance adopted by the DFS?
A: The purpose of the guidance is to combat discrimination in insurance underwriting and pricing using artificial intelligence.
Q: What are the benefits of using AI in insurance?
A: The use of AI in insurance can simplify and expedite underwriting and pricing processes.
Q: What are the risks associated with using AI in insurance?
A: The use of AI in insurance can perpetuate or amplify systemic biases, leading to unlawful or unfair discrimination.
Q: What are the expectations for insurers outlined in the guidance?
A: Insurers are expected to analyze ECDIS and AIS for unfair and unlawful discrimination, demonstrate the actuarial validity of these systems, and maintain a corporate governance framework that provides appropriate oversight of the insurer's overall outcome of the use of ECDIS and AIS.
Q: What is the significance of this announcement?
A: The announcement is a significant milestone in the state's efforts to combat discrimination and promote responsible innovation.