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February 20, 2019

20 February 2019

New York Department of Financial Services Issues Guidance Regarding Life Insurers’ Use of External Consumer Data in Underwriting

On January 18, 2019, the New York State Department of Financial Services (NYDFS) issued Circular Letter 2019-1 (the Circular Letter), addressing insurers’ use of external consumer data and information sources in underwriting for life insurance. The Circular Letter follows an investigation commenced by NYDFS regarding life insurers’ use of external data, which was initiated in light of reports that insurers were using algorithms and predictive models that include unconventional sources or types of external data. Among other things, the Circular Letter provides guidance that when insurers use external data sources in connection with underwriting decisions, (1) the use of external data sources must not result in any unlawful discrimination, (2) the underwriting or rating guidelines must be based on sound actuarial principle; and (3) life insurers must have adequate consumer disclosures to notify insureds or potential insureds of the right to receive the specific reasons for any adverse underwriting decision based on such data. (more…)

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