Colorado Insurance Commissioner Michael Conway called on the National Association of Insurance Commissioners to pursue an AI model law, arguing that a coordinated state-based approach is the best way to keep AI regulation of insurers out of federal hands.
Speaking at the NAIC's summer meeting in Columbus, Ohio, Conway said state insurance regulators need to act before other authorities step in. "I fundamentally think that when other regulatory bodies, whether at the state or federal level, try to regulate the business of insurance, they don't do a good job," Conway said in an interview with S&P Global Market Intelligence. "That's why I think it's so important for us to make sure that we are continuing to move that conversation forward."
An NAIC model law is a template regulation that states can adopt to create a consistent legal framework across the country. States' adoption of model laws is what largely creates the harmonized system of insurance regulation in the US.
A Colorado precedent
Conway's position is shaped by Colorado's experience. When the state legislature passed a bill this year giving the attorney general broad authority over AI use, the insurance sector was carved out - because the Colorado Division of Insurance already regulated AI use by insurers under rules Conway established in 2021.
Conway said the insurance industry initially pushed back against the 2021 regulation, but later became "exceptionally happy" it existed once the attorney general pursued broad AI authority.
"It meant they got to stay with the regulatory body that they understood and knew, and they weren't going to have some other secondary one that was coming after them," Conway said.
If state regulators fail to act without a consistent framework and methodology, "somebody else will fill that void," Conway said.
Current NAIC AI work
The NAIC has not enacted an AI model law, but it has taken other steps. The organization passed a Model Bulletin on the Use of Artificial Intelligence Systems by Insurers in fall 2023, and at least half of US states have since adopted it.
Conway said the adoption rate reflects broad regulator agreement on the need to act. "There is a broad understanding that we need to move in the space," he said. "Half of the states [have] now adopted the AI Bulletin; I think if there wasn't a broad understanding and agreement ... that we need to be in this space, that wouldn't be the case."
The NAIC is also piloting a regulatory framework supplement in select states to support its winter meeting.
For legal professionals advising insurers, the practical question is which regulator will eventually have authority over AI-driven underwriting, pricing, and claims decisions. The NAIC's model bulletin and pilot framework give lawyers a preview of likely state rules, but Conway's warning suggests the alternative - federal oversight - could bring a different set of compliance obligations. Tracking state adoption of the model bulletin and the NAIC's pilot work is a useful way to anticipate where the regulatory floor will settle. Legal teams working in this space can also review AI for Insurance and AI for Legal training resources to understand how AI systems are being deployed across the industry.
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