Nature abhors a vacuum, and the New York Department of Financial Services filled a big one with Insurance Circular Letter No. 1 (2019), which was issued on January 18. The circular letter addresses the use of external consumer data and information sources in the underwriting of life insurance. It grew out of an investigation of life insurers’ underwriting guidelines and practices that began in 2017.
Don’t be deceived by the circular letter’s brevity; it is a must-read for any insurer that is using big data and algorithms. Here are some key takeaways:
Keep your eye on New York, as Linda Lacewell, who is Governor Andrew Cuomo’s nominee to be the Department’s new Superintendent, has a strong prosecutorial background. But don’t lose sight of what’s happening elsewhere, as the ripple effects of the circular letter undoubtedly will be felt throughout the country, including by insurers writing other types of insurance.
Like we’ve been saying, big data and algorithms are cool, but they should only be used with care. Let us know if this message starts to get annoying.