On September 30th, 2021, the New York State Department of Financial Services (DFS) announced a partial lifting of the injunction on the Conditional Approval Underwriting and Rate Development (CAURD) license. This decision comes after a year-long legal battle between DFS and the insurance industry.
The CAURD license was created in 2019 as a way to modernize the insurance industry in New York. It allows insurers to use predictive models and algorithms to determine insurance rates, rather than relying solely on historical data. This approach is meant to provide more accurate and fair pricing for consumers.
However, in February 2020, the New York State Supreme Court issued an injunction on the CAURD license, citing concerns over potential discrimination and lack of transparency in the use of predictive models. The insurance industry argued that the injunction was overly broad and would stifle innovation.
After months of negotiations, DFS and the insurance industry reached a compromise that allows for a partial lifting of the injunction. Insurers can now use predictive models for auto insurance rates, but must first submit their models to DFS for review and approval. The models must also be transparent and explainable, meaning that consumers can understand how their rates were determined.
This decision has been met with mixed reactions. Supporters of the CAURD license argue that it will lead to more accurate and fair pricing for consumers, while opponents worry about potential discrimination and lack of transparency in the use of predictive models.
It remains to be seen how this partial lifting of the injunction will affect the insurance industry in New York. However, it is clear that both DFS and the insurance industry are committed to finding a balance between innovation and consumer protection. As technology continues to advance, it is likely that similar debates will arise in other industries as well.
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- Source: Plato Data Intelligence: PlatoData