AI governance for New York carriers
New York does not follow the NAIC AI model bulletin. The Department of Financial Services runs its own guidance through Insurance Circular Letter No. 7 (2024), which governs how carriers use artificial intelligence systems (AIS) and external consumer data and information sources (ECDIS) in underwriting and pricing. It builds on the 2019 letter that first addressed external data in life insurance and applies the existing anti-discrimination and unfair trade practice standards in New York Insurance Law to AI-driven decisions. The letter reaches every carrier authorized to write in New York, across health, life, and property and casualty lines.
What New York requires
New York frames its expectations around the use of AIS and ECDIS in underwriting and pricing rather than the NAIC's AIS-Program structure. The Department expects carriers to prove these tools are not unfairly discriminatory, to govern them under board and senior-management oversight, and to be transparent with consumers about their use.
Fairness & non-discrimination
Establish that any AIS or ECDIS used in underwriting or pricing does not result in unfair or unlawful discrimination against a protected class, and support every data element and model with generally accepted actuarial standards and a rational, statistically significant relationship to risk.
Proxy assessment & testing
Run a proxy assessment to determine whether an ECDIS or its data fields correlate with a protected class, then carry out quantitative and qualitative testing before deployment and on a regular cadence afterward, documenting both the analysis and any less-discriminatory alternatives considered.
Governance & risk management
Maintain a corporate governance framework with board oversight and senior-management accountability, written policies reviewed at least annually, a documented inventory of the AIS and ECDIS in use, and written standards and audit rights governing third-party vendors and the tools they supply.
Transparency & disclosure
Disclose to consumers when AIS or ECDIS informs an underwriting or pricing decision, give the specific reasons and data sources behind an adverse decision rather than citing proprietary processes, and maintain procedures for consumers to access and correct the information used.
Legal authority
New York grounds the circular in existing Insurance Law that applies regardless of the methodology a carrier uses:
- Prohibited unfair discrimination and protected-class inquiries in insuranceN.Y. Ins. Law Art. 26
- Unfairly discriminatory property/casualty ratesN.Y. Ins. Law §2303
- Prohibition on discrimination because of race, color, creed, national origin, or disabilityN.Y. Ins. Law §2606
- Examination and special-report authority of the SuperintendentN.Y. Ins. Law §§308, 309
Who it applies to
The letter reaches every regulated carrier using AIS or ECDIS in underwriting or pricing:
- Carriers authorized to write insurance in New York
- Article 43 corporations and health maintenance organizations
- Licensed fraternal benefit societies
- The New York State Insurance Fund
Scope note: The circular addresses AIS and ECDIS used in underwriting and pricing across health, life, and property and casualty lines. It does not set a separate threshold by company size, so any covered carrier using these tools is expected to meet the fairness, governance, and transparency standards. Certain regulated data sources, including MIB member exchange services, motor vehicle reports, prescription drug data, and criminal-history searches, fall outside the ECDIS definition.
Compliance timeline
- January 18, 2019DFS issues Circular Letter No. 1 (2019) on external consumer data in life insurance underwriting, the predecessor to the 2024 guidance.
- January 17, 2024DFS publishes the proposed circular letter for public comment.
- July 11, 2024DFS adopts the final Insurance Circular Letter No. 7 (2024), effective upon issuance with no phase-in period.
- OngoingCarriers are expected to complete testing before putting AIS into production and to repeat governance reviews and model testing on a regular cadence.
Resources for New York carriers
Start with these plain-language explainers and field guides.
What is the NAIC Model Bulletin on AI?
The NAIC Model Bulletin on the Use of AI Systems by Insurers is the template most states use to set AI governance expectations. Here is what it says and why it matters.
GuideWhat is an AIS Program?
An AI Systems Program (AIS Program) is the written program the NAIC Model Bulletin expects every carrier to maintain. Here are its four pillars and what each one requires.
GuideWhat are the NAIC AI Principles?
The NAIC AI Principles, adopted in 2020, are the foundation beneath every state AI bulletin. The five principles spell FACTS: Fair, Accountable, Compliant, Transparent, and Secure.
GuideAI in Insurance: Key Regulatory Definitions
The NAIC Model Bulletin defines the terms that carry legal weight, from AI System to Adverse Consumer Outcome to Model Drift. Here is what each one means for carriers.
ArticleAI Governance for Insurance Carriers: Where AI Runs Across the Value Chain and What Regulators Expect
Insurance AI governance across underwriting, claims, catastrophe modeling, distribution, and cyber: where AI runs today, how its failures reach the loss ratio, and the evidence state regulators now expect carriers to produce.
ArticleReinsurance AI: How Reinsurers and Rating Agencies Are Underwriting Your AI
Reinsurers and rating agencies are already forming a view of the AI in your rating and claims stack. The treaty clauses, rating methodology, case history, and renewal evidence every carrier should understand.
New York insurance AI FAQs
Does New York follow the NAIC AI model bulletin?
What are AIS and ECDIS under the circular?
Which entities does the circular cover?
What is the proxy assessment New York expects?
When does the circular take effect?
Sources
- NY DFS: Insurance Circular Letter No. 7 (2024)
- NY DFS: Insurance Circular Letter No. 1 (2019), the predecessor on external data in life insurance
- N.Y. Insurance Law Article 26 (unfair discrimination), New York State Senate
- N.Y. Insurance Law §2303 (unfairly discriminatory rates), New York State Senate
- Debevoise & Plimpton: NYDFS Adopts Final Circular on Use of AI or External Data by Insurers
- Alston & Bird: New York DFS Issues Final Guidance to Insurers on Using AI and External Consumer Data
Get audit-ready for New York's AI circular
Swept AI inventories your models and external data sources, runs the proxy and disparity testing New York expects, and produces the governance and disclosure documentation DFS can request.