N/A — Applies to insurers regulated by NYDFS

On July 11, 2024, the New York Department of Financial Services issued Insurance Circular Letter No. 7 regulating insurers' use of AI systems (AIS) and external consumer data and information sources (ECDIS) in underwriting and pricing. The circular requires a comprehensive three-step assessment process for unfair or unlawful discrimination, actuarial validity testing, annual documentation including model drift checks, and robust governance frameworks with board and senior management oversight. It mandates 15-day notices for denied accelerated underwriting, transparency in disclosures, and prohibits ECDIS from acting as proxies for protected classes unless justified by business necessity. While directly targeting insurers rather than banks, this represents one of the most detailed U.S. regulatory efforts on AI and signals potential enforcement priorities that could extend to financial services more broadly, including BaaS platforms using AI-driven decisioning.

Verified from source: On July 11, 2024, NYDFS issued Insurance Circular Letter (AI Circular Letter) addressing the use of external consumer data and information sources (ECDIS) and artificial intelligence systems (AIS) in insurance underwriting and pricing, requiring discrimination assessments, actuarial validity demonstration, governance frameworks, and third-party vendor oversight.