LO
ConstraintCognitive automation2024-07-11
New York's financial regulator told insurers to test AI systems and external data used in underwriting and pricing for unfair discrimination, before production and regularly afterwards
Actuaryoccupation page →
Event date / reported
2024-07-11
Evidence stage
ConstraintFailure, rollback, regulation or cost is suppressing adoption. Can lower an assessment or widen its uncertainty.
Tasks this bears on
Building the pricing model
Deciding which factors set the price of a policy, fitting the model, and defending why each factor belongs there.
Being augmented✓ Evidence-backed
Testing a model for unfair discrimination
Running the checks that show whether a model treats protected groups differently, before it goes live and again afterwards, and documenting the answer.
New task✓ Evidence-backed
Where this applies
The regulator's own circular letter of 11 July 2024, addressed to insurers authorised in New York, fraternal societies, HMOs and the State Insurance Fund. Its verbs are expectations (should), not a statute, and it covers underwriting and pricing only. It expects unfair or unlawful discrimination testing before an AI system goes into production and on a regular cadence thereafter, lists quantitative methods including the adverse impact ratio, denial odds ratios and marginal effects, expects insurers to show that external data are supported by generally accepted actuarial standards of practice, requires comprehensive documentation, places oversight on the board and senior management, and says insurers retain responsibility for third-party vendor tools. It does not say who inside an insurer does the testing, and it measures nothing about actuaries' work or numbers.
What this means
A major insurance regulator expects AI pricing and underwriting models to be tested for unfair discrimination before and after they go live, with named quantitative methods, and expects the data behind them to meet actuarial standards.
What it does not yet show
These are supervisory expectations in one state, for underwriting and pricing only. They do not say that actuaries rather than data scientists or compliance staff do the testing, and they measure nothing about actuarial jobs.
What you can check
Find out who at your insurer owns the unfair-discrimination testing of pricing models, and which of the named methods they use.
Does it change the assessment?
No. The impact index is never moved by a single event. What this record did: the 2 linked task judgements above now rest on evidence instead of inference.
Source
New York State Department of Financial Services — Insurance Circular Letter No. 7 (2024) · verified 2026-09-23 · Claude (VOLO agent) — source text fetched and cross-checked · interpreted 2026-09-23 · Claude (VOLO agent) — source text fetched and cross-checked
Primary source — published by the party that did this, or the authority of record. No co-signature needed.