Insurance Industry Pushes Back Against AI Regulation Ban in Sweeping Federal Bill
The insurance industry opposes a proposed 10-year ban on state AI regulation, citing existing frameworks that balance innovation and consumer protection. They warn the moratorium could hinder oversight and disrupt markets.
Insurance Industry Pushes Back Against Proposed 10-Year Moratorium on State AI Regulation
A recent proposal within the sweeping tax legislation, dubbed the “One Big Beautiful Bill,” includes a 10-year moratorium on state regulation of artificial intelligence. This moratorium would block existing and future state laws regulating AI, raising alarms within the insurance sector.
The National Association of Professional Insurance Agents (PIA) has formally expressed strong opposition to this provision. In a letter sent to Senate leaders, PIA urged the removal of the moratorium or, at minimum, an explicit exemption for insurance-related AI regulation. The association emphasized that insurance companies are already subject to comprehensive state oversight regarding AI use.
Existing State Regulations and Industry Standards
PIA highlighted a model framework established by the National Association of Insurance Commissioners (NAIC). This model mandates insurers to maintain AI governance programs compliant with current state and federal laws. Nearly 30 states have adopted this approach, ensuring AI in insurance is managed responsibly.
NAIC also weighed in after the House passed the bill, underscoring the effectiveness of state-level regulation in responding to market changes. State oversight has balanced consumer protection with innovation, offering the flexibility needed for experimentation and adaptation.
Concerns Over the Bill’s Broad AI Definition
Both NAIC and industry stakeholders criticized the bill’s definition of AI as overly broad. They warned it could unintentionally cover existing analytical tools and software routinely used by insurers, such as simulations, stochastic forecasting, and insurtech systems for underwriting, claims processing, and rate setting.
InsurTech and Regulatory Groups Speak Out
The American InsurTech Council (AITC) strongly opposes the moratorium, describing it as a threat to consumer protections amid significant technological shifts. They argue that halting state regulation would create a dangerous oversight vacuum at a critical time for AI-driven insurance innovation.
Additionally, 40 state attorneys general have urged Congress to reject the moratorium. The National Council of Insurance Legislators (NCOIL) echoed this stance, warning that a ban on state regulation would disrupt insurance markets and limit legislators’ ability to address AI’s unknown risks. Their constituents demand timely protective policies rather than waiting a decade.
What This Means for Insurance Professionals
State regulators currently provide a framework that balances innovation with consumer safeguards. A moratorium could delay important regulatory updates and leave insurers without clear guidance on emerging AI technologies.
Insurance professionals should stay informed about ongoing legislative developments and the evolving regulatory landscape. Understanding how AI governance models like NAIC’s operate can help navigate compliance and foster responsible AI adoption.
For those interested in building expertise in AI applications relevant to insurance, exploring specialized AI training can be valuable. Resources such as Complete AI Training’s courses for insurance professionals offer practical insights into AI tools and governance.
