NY-RATE-0231 HOLD

Notices should state whether AIS is used, whether external vendor data is used, and the right to request information about the specific data behind the decision; adverse decision reasons should include details about all information relied on, including its source; an insurer may not cite a vendor's proprietary algorithms to avoid specificity (summary of paragraphs 38–41, which cite Insurance Law §§ 3425, 3426 and 4224(a)(2), (b)(2)).

An insurer should not use ECDIS or AIS for underwriting or pricing unless it has determined that the data source or model does not use or is not based on a protected class and does not result in unfair or unlawful discrimination; the insurer remains responsible when it relies on a vendor and "may not rely solely on a third-party's claim of non-discrimination"; the comprehensive assessment proceeds in three steps: whether the use produces a disproportionate adverse effect on a protected class, whether a legitimate, lawful and fair rationale exists, and whether a less discriminatory alternative is available (summary of paragraphs 13–15).

Insurers should document the testing methods and analysis, commensurate with the use, complexity and materiality of the AIS, and make them available to the Department on request; testing should occur before an AIS is put into production, on a regular cadence afterwards and following material changes; acceptable metrics include adverse impact ratios, denial odds ratios, marginal effects, standardized mean differences and the drivers of disparity; the insurer should be able to explain "at all times" how its AIS operates (summary of paragraphs 16–19).

"(a) Except as provided in section one thousand one hundred eight of this chapter, no individual or entity subject to the supervision of the superintendent shall because of race, color, creed, national origin, or disability: (1) Make any distinction or discrimination between persons as to the premiums or rates charged for insurance policies or in any other manner whatever. (2) Demand or require a greater premium from any persons than it requires at that time from others in similar cases. (3) Make or require any rebate, discrimination or discount upon the amount to be paid or the service to be rendered on any policy. ..."

"Rates shall not be excessive, inadequate, unfairly discriminatory, destructive of competition or detrimental to the solvency of insurers. In determining whether rates comply with the foregoing standards, the superintendent shall include all income earned by such insurer ... on all its investments of any kind and wherever located. ..."