Tag Archives: Eric Dinallo

The NYDFS Plans to Impose Significant Obligations on Insurers Using AI or External Data

by Eric Dinallo, Avi Gesser, Erez Liebermann, Marshal Bozzo, Matt Kelly, Johanna Skrzypczyk, Corey Goldstein, Samuel J. Allaman, Michelle Huang, and Sharon Shaji

Photos of the authors

Top (from left to right): Eric Dinallo, Avi Gesser, Erez Liebermann, Marshal Bozzo, and Matt Kelly
Bottom (from left to right): Johanna Skrzypczyk, Corey Goldstein, Samuel J. Allaman, Michelle Huang, and Sharon Shaji (Photos courtesy of Debevoise & Plimpton LLP)

On January 17, 2024, the New York State Department of Financial Services (the “NYDFS”) issued a Proposed Insurance Circular Letter regarding the Use of Artificial Intelligence Systems and External Consumer Data and Information Sources in Insurance Underwriting and Pricing (the “Proposed Circular” or “PCL”). The Proposed Circular is the latest regulatory development in artificial intelligence (“AI”) for insurers, following the final adoption of Colorado’s AI Governance and Risk Management Framework Regulation (“CO Governance Regulation”) and the proposed Colorado AI Quantitative Testing Regulation (the “CO Proposed Testing Regulation”), discussed here, and the National Association of Insurance Commissioners’ (“NAIC”) model bulletin on the “Use of Artificial Intelligence Systems by Insurers” (the “NAIC Model Bulletin”), discussed here. In the same way that NYDFS’s Part 500 Cybersecurity Regulation influenced standards for cybersecurity beyond New York State and beyond the financial sector, it is possible that the Proposed Circular will have a significant impact on the AI regulatory landscape.

The PCL builds on the NYDFS’s 2019 Insurance Circular Letter No. 1 (the “2019 Letter”) and includes some clarifying points on the 2019 Letter’s disclosure and transparency obligations. The 2019 Letter was limited to the use of external consumer data and information sources (“ECDIS”) for underwriting life insurance and focused on risks of unlawful discrimination that could result from the use of ECDIS and the need for consumer transparency. The Proposed Circular incorporates the general obligations from the 2019 Letter, adding more detailed requirements, expands the scope beyond life insurance, and adds significant governance and documentation requirements.

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The Final Colorado AI Insurance Regulations: What’s New and How to Prepare

by Avi Gesser, Erez Liebermann, Eric Dinallo, Matt Kelly, Corey Jeremy Goldstein, Stephanie D. Thomas, Samuel J. Allaman, and Basil Fawaz

Photo of authors

Top left to right: Avi Gesser, Erez Liebermann, Eric Dinallo and Matt Kelly
Bottom left to right: Corey Jeremy Goldstein, Stephanie D. Thomas, Samuel J. Allaman and Basil Fawaz
(Photos courtesy of Debevoise & Plimpton LLP)

On September 21, 2023, the Colorado Division of Insurance (the “DOI”) released its Final Governance and Risk Management Framework Requirements for Life Insurers’ Use of External Consumer Data and Information Sources, Algorithms, and Predictive Models (the “Final Regulation”). As discussed below, the Final Regulation (which becomes effective on November 14, 2023) reflects several small changes from the previous version of the regulation that was released on May 26, 2023 (the “Draft Regulation”). A redline reflecting these changes can be found here.

The most substantive change is the requirement that insurers must remediate any detected unfair discrimination. This change is especially significant in light of the DOI’s release of its draft regulation on Quantitative Testing for Unfairly Discriminatory Outcomes for Algorithms and Predictive Models Used for Life Insurance Underwriting (the “Draft Testing Regulation”) on September 28, 2023, which requires insurers to estimate the race and ethnicity of all proposed insureds that have applied for life insurance coverage and then conduct detailed quantitative testing of models that use external consumer data and information sources (“ECDIS”) for potential bias. The Testing Regulation provides that certain results of that prescribed testing methodology will be deemed to be unfairly discriminatory and thereby require the insurer to “immediately take reasonable steps . . . to remediate the unfairly discriminatory outcome . . .”  We will be writing much more about our concerns over the Draft Testing Regulation in the coming weeks.

In this Blog Post, we discuss the Final Regulation, how it differs from the Draft Regulation, and what companies should be doing now to prepare for compliance.

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The Revised Colorado AI Insurance Regulations: What Was Fixed, and What Still May Need Fixing

by Eric Dinallo, Avi Gesser, Matt Kelly, Samuel J. Allaman, Anna R. Gressel, Melissa Muse, and Stephanie D. Thomas

Photos of the authors

From top left to right: Eric Dinallo, Avi Gesser, Matt Kelly, and Samuel J. Allaman.
From bottom left to right: Anna R. Gressel, Melissa Muse, and Stephanie D. Thomas.
(Photos courtesy of Debevoise & Plimpton LLP)

On May 26, 2023, the Colorado Division of Insurance (the “DOI”) released its Revised Draft Algorithm and Predictive Model Governance Regulation (the “Revised Regulation”), amending its initial draft regulation (the “Initial Regulation”), which was released on February 1, 2023. The Revised Regulation imposes requirements on Colorado-licensed life insurance companies that use external consumer data and information sources (“ECDIS”), as well as algorithms and predictive models (“AI models”) that use ECDIS, in insurance practices. The Revised Regulation comes after months of active engagement between the DOI and industry stakeholders. In this Debevoise In Depth, we discuss the Revised Regulation, how it differs from the Initial Regulation, what additional changes should be considered, and how companies can prepare for compliance.

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Colorado Draft AI Insurance Rules Are a Watershed for AI Governance Regulation

by Eric Dinallo, Avi Gesser, Erez Liebermann, Marshal Bozzo, Anna Gressel, Sam Allaman, Melissa Muse, and Jackie Dorward

Photos of the authors

(Photos courtesy of Debevoise & Plimpton LLP) From top left to right: Eric Dinallo, Avi Gesser, Erez Liebermann, and Marshal Bozzo; From bottom left to right: Anna Gressel, Sam Allaman, and Melissa Muse 

On February 1, 2023, the Colorado Division of Insurance (“DOI”) released its draft Algorithm and Predicative Model Governance Regulation (the “Draft AI Regulation”). The Draft AI Regulation imposes requirements on Colorado-licensed life insurance companies that use external data and AI systems in insurance practices. This release follows months of highly active engagement between the DOI and industry stakeholders, resulting in a first-in-the-nation set of AI and Big Data governance rules that will influence state, federal and international AI regulations for many years to come.

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California Restricts Insurers’ Use of AI and Big Data

by Eric R. Dinallo, Avi Gesser, Marshal L. Bozzo, Anna R. Gressel, and Scott M. Caravello

On June 30, 2022, the California Department of Insurance (the “Department”) released Bulletin 2022-5 (the “Bulletin”), which places several limitations on the use of Artificial Intelligence (“AI”) and alternative data sets (“Big Data”) by the insurance industry. The Bulletin states that the Department is aware of recent allegations of racial discrimination in marketing, rating, underwriting and claims practices by insurance companies and reminds all insurance companies of their obligations to conduct their businesses “in a manner that treats all similarly-situated persons alike.”

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