NYDFS Reminds Life Insurers of Data Protection Rules

The NYDFS Insurance Circular Letter No. 1 (2019) advises insurers writing life insurance in NY of their obligations when using external consumer data and information sources in underwriting life insurance. Please click on the link above to read the circular letter.

When using external data and other information sources in underwriting, the DFS suggests insurers consider: 1) is the data actuarially supportable and 2) is there a valid rationale to justify different treatment of similar applicants? Strong correlations alone may not be enough to justify the use of certain data.

DFS sees the potential for illegal discrimination from the use of bid data. Big data cannot collect or utilize prohibited criteria. The use of big data and predictive models cannot be discriminatory or adversely impact protected classes.

Insurers are responsible for any discrimination that results from the use of this data or models and cannot rely on a third-party vendors claim or the proprietary nature of the algorithm.

The DFS considers the inability to pass through an accelerated or algorithmic underwriting process an adverse underwriting decision, possibly triggering disclosure under NY Law as to the reason for the underwriting action.