S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8369
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             December 13, 2023
                                ___________
 
 Introduced  by  M.  of  A.  CUNNINGHAM  -- read once and referred to the
   Committee on Insurance
 
 AN ACT to amend the insurance law, in relation to the  use  of  external
   consumer  data  and  information  sources  being used when determining
   insurance rates
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The insurance law is amended by adding a new section 2403-a
 to read as follows:
   §  2403-A.  INSURERS'  USE  OF  EXTERNAL CONSUMER DATA AND INFORMATION
 SOURCES; PROHIBITED. (A) NO INSURER SHALL:
   (1) UNFAIRLY DISCRIMINATE BASED ON RACE,  COLOR,  NATIONAL  OR  ETHNIC
 ORIGIN,  RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER IDENTITY,
 OR GENDER EXPRESSION; OR
   (2) PURSUANT TO RULES ADOPTED BY THE SUPERINTENDENT, USE ANY  EXTERNAL
 CONSUMER  DATA  AND  INFORMATION  SOURCES,  AS WELL AS ANY ALGORITHMS OR
 PREDICTIVE MODELS THAT USE EXTERNAL CONSUMER DATA AND INFORMATION SOURC-
 ES, IN A WAY THAT UNFAIRLY DISCRIMINATES BASED ON RACE, COLOR,  NATIONAL
 OR  ETHNIC ORIGIN, RELIGION, SEX, SEXUAL ORIENTATION, DISABILITY, GENDER
 IDENTITY, OR GENDER EXPRESSION.
   (B) (1) THE SUPERINTENDENT SHALL ADOPT ANY RULES OR REGULATIONS NECES-
 SARY FOR THE IMPLEMENTATION OF THIS SECTION.
   (2) THE SUPERINTENDENT SHALL ENGAGE IN A STAKEHOLDER PROCESS PRIOR  TO
 THE  ADOPTION  OF  RULES  OR  REGULATIONS FOR ANY TYPE OF INSURANCE THAT
 INCLUDES CARRIERS, PRODUCERS, CONSUMER REPRESENTATIVES, AND OTHER INTER-
 ESTED PARTIES. THE SUPERINTENDENT SHALL HOLD  STAKEHOLDER  MEETINGS  FOR
 STAKEHOLDERS OF DIFFERENT TYPES OF INSURANCE TO ENSURE SUFFICIENT OPPOR-
 TUNITY TO CONSIDER FACTORS AND PROCESSES RELEVANT TO EACH TYPE OF INSUR-
 ANCE. THE SUPERINTENDENT SHALL PROVIDE NOTICE OF STAKEHOLDER MEETINGS ON
 THE DEPARTMENT'S WEBSITE, AND SUCH STAKEHOLDER MEETINGS SHALL BE OPEN TO
 THE PUBLIC.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD13436-01-3
              

 A. 8369                             2
 
   (C)  (1)  AFTER THE STAKEHOLDER PROCESS DESCRIBED IN SUBSECTION (B) OF
 THIS SECTION, THE SUPERINTENDENT SHALL ADOPT RULES  OR  REGULATIONS  FOR
 SPECIFIC  TYPES  OF INSURANCE, BY INSURANCE PRACTICE, WHICH RULES ESTAB-
 LISH MEANS BY WHICH AN INSURER MAY DEMONSTRATE, TO THE EXTENT  PRACTICA-
 BLE,  THAT  IT  HAS TESTED WHETHER ITS USE OF EXTERNAL CONSUMER DATA AND
 INFORMATION SOURCES, AS WELL AS ALGORITHMS OR  PREDICTIVE  MODELS  USING
 EXTERNAL  CONSUMER  DATA AND INFORMATION SOURCES, UNFAIRLY DISCRIMINATES
 BASED ON RACE, COLOR, NATIONAL OR ETHNIC ORIGIN, RELIGION,  SEX,  SEXUAL
 ORIENTATION, DISABILITY, GENDER IDENTITY, OR GENDER EXPRESSION.
   (2)  RULES  AND  REGULATIONS  ADOPTED  PURSUANT  TO THIS SECTION SHALL
 REQUIRE EACH INSURER TO:
   (I) PROVIDE INFORMATION TO THE SUPERINTENDENT CONCERNING THE  EXTERNAL
 CONSUMER  DATA AND INFORMATION SOURCES USED BY THE INSURER IN THE DEVEL-
 OPMENT AND IMPLEMENTATION OF ALGORITHMS  AND  PREDICTIVE  MODELS  FOR  A
 PARTICULAR TYPE OF INSURANCE AND INSURANCE PRACTICE;
   (II)  PROVIDE  AN  EXPLANATION OF THE MANNER IN WHICH THE INSURER USES
 EXTERNAL CONSUMER DATA AND INFORMATION SOURCES, AS  WELL  AS  ALGORITHMS
 AND  PREDICTIVE  MODELS  USING  EXTERNAL  CONSUMER  DATA AND INFORMATION
 SOURCES, FOR THE PARTICULAR TYPE OF INSURANCE AND INSURANCE PRACTICE;
   (III) ESTABLISH AND MAINTAIN A RISK MANAGEMENT  FRAMEWORK  OR  SIMILAR
 PROCESSES  OR  PROCEDURES  THAT ARE REASONABLY DESIGNED TO DETERMINE, TO
 THE EXTENT PRACTICABLE, WHETHER THE INSURER'S USE OF  EXTERNAL  CONSUMER
 DATA  AND  INFORMATION  SOURCES,  AS  WELL  AS ALGORITHMS AND PREDICTIVE
 MODELS USING EXTERNAL CONSUMER DATA AND  INFORMATION  SOURCES,  UNFAIRLY
 DISCRIMINATES BASED ON RACE, COLOR, NATIONAL OR ETHNIC ORIGIN, RELIGION,
 SEX,   SEXUAL   ORIENTATION,  DISABILITY,  GENDER  IDENTITY,  OR  GENDER
 EXPRESSION;
   (IV) PROVIDE AN ASSESSMENT OF  THE  RESULTS  OF  THE  RISK  MANAGEMENT
 FRAMEWORK  OR SIMILAR PROCESSES OR PROCEDURES AND ACTIONS TAKEN TO MINI-
 MIZE THE RISK OF UNFAIR DISCRIMINATION,  INCLUDING  ONGOING  MONITORING;
 AND
   (V)  PROVIDE  AN  ATTESTATION BY ONE OR MORE OFFICERS THAT THE INSURER
 HAS IMPLEMENTED THE RISK MANAGEMENT FRAMEWORK OR  SIMILAR  PROCESSES  OR
 PROCEDURES APPROPRIATELY ON A CONTINUOUS BASIS.
   (3)  THE  RULES AND REGULATIONS ADOPTED BY THE SUPERINTENDENT PURSUANT
 TO THIS SECTION SHALL INCLUDE PROVISIONS ESTABLISHING:
   (I) A REASONABLE PERIOD OF TIME FOR INSURERS TO  REMEDY  ANY  UNFAIRLY
 DISCRIMINATORY IMPACT IN AN ALGORITHM OR PREDICTIVE MODEL; AND
   (II)  THE ABILITY OF INSURERS TO USE EXTERNAL CONSUMER DATA AND INFOR-
 MATION SOURCES,  AS  WELL  AS  ALGORITHMS  OR  PREDICTIVE  MODELS  USING
 EXTERNAL CONSUMER DATA AND INFORMATION SOURCES, THAT HAVE BEEN PREVIOUS-
 LY ASSESSED BY THE DEPARTMENT AND FOUND NOT TO BE UNFAIRLY DISCRIMINATO-
 RY.
   (D)  DOCUMENTS,  MATERIALS, AND OTHER INFORMATION IN THE POSSESSION OR
 CONTROL OF THE DEPARTMENT THAT ARE OBTAINED BY, CREATED BY, OR DISCLOSED
 TO THE SUPERINTENDENT OR ANY OTHER PERSON PURSUANT TO  THIS  SECTION  OR
 ANY RULES OR REGULATIONS ADOPTED PURSUANT TO THIS SECTION ARE RECOGNIZED
 AS PROPRIETARY AND CONTAINING TRADE SECRETS. ALL SUCH DOCUMENTS, MATERI-
 ALS,  AND  OTHER  INFORMATION  ARE  CONFIDENTIAL AND PRIVILEGED; ARE NOT
 SUBJECT TO DISCLOSURE UNDER ARTICLE SIX OF THE PUBLIC OFFICERS  LAW,  OR
 OTHER  OPEN RECORDS, FREEDOM OF INFORMATION, SUNSHINE, OR SIMILAR LAW OF
 THIS STATE; ARE NOT SUBJECT TO SUBPOENA; AND ARE NOT SUBJECT TO  DISCOV-
 ERY  OR ADMISSIBLE IN EVIDENCE IN ANY PRIVATE CIVIL ACTION. HOWEVER, THE
 SUPERINTENDENT MAY USE THE DOCUMENTS, MATERIALS, OR OTHER INFORMATION IN
 THE FURTHERANCE OF ANY REGULATORY OR LEGAL ACTION BROUGHT AS PART OF THE
 SUPERINTENDENT'S OFFICIAL DUTIES. THE SUPERINTENDENT SHALL NOT OTHERWISE
 A. 8369                             3
 
 MAKE THE DOCUMENTS, MATERIALS, OR OTHER INFORMATION PUBLIC  WITHOUT  THE
 PRIOR  WRITTEN  CONSENT OF THE INSURER FROM WHICH THE DOCUMENTS, MATERI-
 ALS, OR OTHER INFORMATION WAS OBTAINED. THE SUPERINTENDENT MAY MAKE DATA
 PUBLICLY  AVAILABLE IN AN AGGREGATED OR DE-IDENTIFIED FORMAT IN A MANNER
 DEEMED APPROPRIATE.
   (E) THE SUPERINTENDENT MAY EXAMINE AND INVESTIGATE AN INSURER'S USE OF
 AN EXTERNAL CONSUMER DATA AND INFORMATION SOURCE, ALGORITHM, OR  PREDIC-
 TIVE  MODEL IN ANY INSURANCE PRACTICE. INSURERS SHALL COOPERATE WITH THE
 SUPERINTENDENT AND DEPARTMENT IN ANY EXAMINATION OR INVESTIGATION  UNDER
 THIS SECTION.
   (F) THE SUPERINTENDENT SHALL ANNUALLY SUBMIT A REPORT TO THE GOVERNOR,
 THE  TEMPORARY PRESIDENT OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, THE
 MINORITY LEADER OF THE SENATE AND THE MINORITY LEADER  OF  THE  ASSEMBLY
 AND  THE  INSURANCE  CHAIRS  OF THE SENATE AND ASSEMBLY COMMITTEES. SUCH
 REPORT SHALL INCLUDE, BUT NOT BE LIMITED TO:
   (1) INFORMATION CONCERNING ANY CHANGES IN INSURANCE  RATES  THAT  HAVE
 RESULTED  FROM  THE  PROHIBITIONS  DESCRIBED  IN  SUBSECTION (A) OF THIS
 SECTION;
   (2) A SUMMARY OF THE STAKEHOLDER ENGAGEMENT PROCESS DESCRIBED IN PARA-
 GRAPH TWO OF SUBSECTION (B) OF THIS SECTION; AND
   (3) A DESCRIPTION OF DATA SOURCES, IF ANY, DISCUSSED DURING THE STAKE-
 HOLDER ENGAGEMENT PROCESS, WHICH DATA SOURCES INSURERS MAY USE TO COMPLY
 WITH THIS SECTION.
   (G) NOTWITHSTANDING ANY PROVISION OF THIS  SECTION  TO  THE  CONTRARY,
 THIS SECTION DOES NOT APPLY TO:
   (1) TITLE INSURANCE, PURSUANT TO ARTICLE SIXTY-FOUR OF THIS CHAPTER;
   (2) BONDS EXECUTED BY QUALIFIED SURETY; OR
   (3)  INSURERS  ISSUING COMMERCIAL INSURANCE POLICIES; EXCEPT THAT THIS
 SECTION SHALL APPLY TO INSURERS THAT ISSUE BUSINESS OWNERS' POLICIES  OR
 COMMERCIAL  GENERAL  LIABILITY POLICIES, WHICH BUSINESS OWNERS' POLICIES
 OR COMMERCIAL GENERAL LIABILITY POLICIES HAVE  ANNUAL  PREMIUMS  OF  TEN
 THOUSAND DOLLARS OR LESS.
   (H) NOTHING IN THIS SECTION:
   (1)  REQUIRES  AN INSURER TO COLLECT FROM AN APPLICANT OR POLICYHOLDER
 THE RACE, COLOR, NATIONAL OR ETHNIC ORIGIN, RELIGION, SEX, SEXUAL ORIEN-
 TATION, DISABILITY, GENDER IDENTITY, OR GENDER EXPRESSION OF AN INDIVID-
 UAL; OR
   (2) MAY BE CONSTRUED TO:
   (I) PROHIBIT THE USE OF, OR REQUIRE LIFE, ANNUITY, LONG-TERM CARE,  OR
 DISABILITY INSURERS TO TEST MEDICAL, FAMILY HISTORY, OCCUPATIONAL, DISA-
 BILITY,  OR  BEHAVIORAL  INFORMATION  RELATED  TO A SPECIFIC INDIVIDUAL,
 WHICH INFORMATION, BASED ON ACTUARIALLY SOUND PRINCIPLES, HAS  A  DIRECT
 RELATIONSHIP  TO  MORTALITY,  MORBIDITY,  OR  LONGEVITY RISK UNLESS SUCH
 INFORMATION IS OTHERWISE INCLUDED IN THE  TESTING  OF  AN  ALGORITHM  OR
 PREDICTIVE  MODEL  THAT ALSO USES EXTERNAL CONSUMER DATA AND INFORMATION
 SOURCES;
   (II) PROHIBIT THE USE OF, OR REQUIRE LIFE, ANNUITY, LONG-TERM CARE, OR
 DISABILITY INSURERS TO TEST TRADITIONAL UNDERWRITING FACTORS BEING  USED
 FOR THE EXCLUSIVE PURPOSE OF DETERMINING INSURABLE INTEREST OR ELIGIBIL-
 ITY FOR COVERAGE UNLESS SUCH FACTORS ARE OTHERWISE INCLUDED IN THE TEST-
 ING OF AN ALGORITHM OR PREDICTIVE MODEL THAT ALSO USES EXTERNAL CONSUMER
 DATA AND INFORMATION SOURCES; OR
   (III)  PROHIBIT  THE USE OF OR REQUIRE THE TESTING OF LONGSTANDING AND
 WELL-ESTABLISHED COMMON INDUSTRY PRACTICES IN SETTLING CLAIMS OR  TRADI-
 TIONAL  UNDERWRITING  PRACTICES  UNLESS  SUCH  PRACTICES  OR FACTORS ARE
 A. 8369                             4
 
 OTHERWISE INCLUDED IN THE TESTING OF AN ALGORITHM  OR  PREDICTIVE  MODEL
 THAT ALSO USES EXTERNAL CONSUMER DATA AND INFORMATION SOURCES.
   (I) AS USED IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES:
   (1) "ALGORITHM" MEANS A COMPUTATIONAL OR MACHINE LEARNING PROCESS THAT
 INFORMS HUMAN DECISION MAKING IN INSURANCE PRACTICES.
   (2)  (I)  "EXTERNAL CONSUMER DATA AND INFORMATION SOURCE" MEANS A DATA
 OR AN INFORMATION SOURCE THAT IS USED BY AN INSURER TO SUPPLEMENT TRADI-
 TIONAL UNDERWRITING OR OTHER INSURANCE PRACTICES OR TO  ESTABLISH  LIFE-
 STYLE INDICATORS THAT ARE USED IN INSURANCE PRACTICES. "EXTERNAL CONSUM-
 ER  DATA  AND  INFORMATION  SOURCE" INCLUDES CREDIT SCORES, SOCIAL MEDIA
 HABITS,  LOCATIONS,  PURCHASING  HABITS,  HOME  OWNERSHIP,   EDUCATIONAL
 ATTAINMENT, OCCUPATION, LICENSURES, CIVIL JUDGMENTS, AND COURT RECORDS.
   (II)  THE  SUPERINTENDENT  MAY  PROMULGATE  RULES  AND  REGULATIONS TO
 FURTHER DEFINE "EXTERNAL  CONSUMER  DATA  AND  INFORMATION  SOURCE"  FOR
 PARTICULAR LINES OF INSURANCE AND INSURANCE PRACTICES.
   (3)  "INSURANCE  PRACTICE"  MEANS  MARKETING,  UNDERWRITING,  PRICING,
 UTILIZATION MANAGEMENT, REIMBURSEMENT METHODOLOGIES, AND CLAIMS  MANAGE-
 MENT IN THE TRANSACTION OF INSURANCE.
   (4)  "PREDICTIVE  MODEL"  MEANS  A  PROCESS  OF USING MATHEMATICAL AND
 COMPUTATIONAL METHODS THAT EXAMINE CURRENT AND HISTORICAL DATA SETS  FOR
 UNDERLYING PATTERNS AND CALCULATE THE PROBABILITY OF AN OUTCOME.
   (5)  "UNFAIRLY  DISCRIMINATE"  AND "UNFAIR DISCRIMINATION" INCLUDE THE
 USE OF ONE OR MORE EXTERNAL CONSUMER DATA AND  INFORMATION  SOURCES,  AS
 WELL AS ALGORITHMS OR PREDICTIVE MODELS USING EXTERNAL CONSUMER DATA AND
 INFORMATION SOURCES, THAT HAVE A CORRELATION TO RACE, COLOR, NATIONAL OR
 ETHNIC  ORIGIN,  RELIGION,  SEX,  SEXUAL ORIENTATION, DISABILITY, GENDER
 IDENTITY, OR GENDER EXPRESSION, AND THAT USE RESULTS IN A DISPROPORTION-
 ATELY NEGATIVE OUTCOME FOR SUCH CLASSIFICATION OR CLASSIFICATIONS, WHICH
 NEGATIVE OUTCOME EXCEEDS THE REASONABLE CORRELATION  TO  THE  UNDERLYING
 INSURANCE PRACTICE, INCLUDING LOSSES AND COSTS FOR UNDERWRITING.
   § 2. This act shall take effect on the one hundred eightieth day after
 it  shall have become a law. Effective immediately, the addition, amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation of this act on its effective date are authorized to be  made  and
 completed on or before such effective date.