State Insurance Regulators Push Back on Federal AI Oversight
The National Council of Insurance Legislators is moving toward a resolution that would keep artificial intelligence regulation in the hands of individual states rather than the federal government. The Joint State-Federal Relations & International Insurance Issues Committee discussed the draft resolution last week.
The resolution argues that state-based insurance regulation has successfully adapted to technological change over decades. It also pushes back against two federal actions: a proposed 10-year moratorium on state AI authority and a recently signed executive order that aims to preempt state AI legislation.
What Insurers Are Using AI For
Insurers have deployed AI across their operations-sales, marketing, underwriting, rating, claims handling, fraud detection, and customer service. The resolution acknowledges this creates both efficiency gains and risks around transparency, data governance, and consumer protection.
State legislators want the ability to develop safeguards that reflect their constituents' concerns about these unknowns, the resolution states.
A Model Act Paused
New York Assemblyman Erik Dilan, who sponsored the resolution, introduced a separate model act requiring human involvement in insurance decisions, particularly claims and denials. But the committee paused work on that model after discussions revealed a lack of consensus among members.
Dilan said the requirement was too new for the insurance process and caused hesitation. He wants to see how state legislatures address AI before pushing forward with a model act.
"I still want to discuss AI at NCOIL and hope that it will be a topic of major conversation on meeting agendas," Dilan said.
What the Resolution Would Ask States to Do
- Protect consumers while allowing innovation to proceed
- Regulate insurer AI use in ways that promote transparency, accountability, data integrity, and fair discrimination
- Coordinate efforts across states to promote consistency while letting each state address local market conditions
The committee will vote on the resolution in April. Assemblyman Jared Gondalfo, who chairs the Financial Services and Multi-Lines Issues Committee, supports the direction. "It's incumbent that our organization continues to discuss AI and try to learn as much as we can," he said, noting how quickly the sector is changing.
Utah Rep. Jim Dunnigan also backed the approach. A bill in his state to promote state-level AI regulation failed to advance this year. "I think the states are the laboratories, and we need to figure out what's best for our state," he said.
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