AI Is Here — But Who Gets to Regulate It?
Artificial intelligence isn’t just arriving — it’s already reshaping the insurance industry in ways both powerful and controversial. As insurers race forward with advanced technologies, a new question emerges: Who sets the rules? State regulators… or the federal government?
Our friends at InsuranceNewsNet unpacked this growing tension in their in‑depth feature. You can read their original reporting here: AI Is Here, But Who Will Regulate It?.
Insurance’s AI Explosion
AI adoption is accelerating at a remarkable pace across every major insurance sector. According to the NAIC, usage is active or planned at the following rates:
Health insurers: 92%
Auto insurers: 88%
Home insurers: 70%
Life insurers: 58%
With over 90% of insurance executives identifying AI as a top strategic priority, the industry is entering a transformational phase. But with transformation comes urgent questions about fairness, bias, privacy, and how deeply algorithms should influence financial and personal decisions.
NAIC’s Slow, Careful Steps
The NAIC has begun building a framework for oversight. Their late‑2023 Model Bulletin on AI and algorithms outlines best practices for testing predictive systems for fairness and discrimination.
However — there’s a catch. This bulletin only applies in states that choose to adopt it, giving it little uniform enforcement power.
A New AI Evaluation Tool
To strengthen oversight, the NAIC’s Big Data and Artificial Intelligence Working Group is developing an AI Systems Evaluation Tool. This next‑generation framework will help regulators deeply assess how insurers use AI, especially in areas that affect consumer rights.
A pilot is scheduled for 2026 with ten insurers. Once complete, regulators will refine the tool based on what they learn.
“At the conclusion of the pilot period, we’ll then hear from the pilot group and consider lessons learned,” said Iowa Insurance Commissioner Doug Ommen. “The pilot itself will be very instructive.”
The Federal Government Steps In
A major twist emerged when President Donald Trump signed the executive order “Ensuring a National Policy Framework for Artificial Intelligence.” This order seeks to centralize AI regulation at the federal level — even above state authority.
Colorado’s groundbreaking AI Act was explicitly cited as an example of why the White House believes states may pose barriers to national innovation.
But this federal involvement threatens to reshape decades of state‑driven insurance regulation — and state leaders are pushing back hard.
Pushback From the States
State regulators argue that they are — and must remain — the primary overseers of the insurance industry. NAIC and NCOIL quickly issued strong statements criticizing the federal move, warning it could cause:
- Delays in consumer protections
- Obstacles in addressing discriminatory practices
- Confusion across established regulatory systems
- Disruption to underwriting and claims workflows
Legal scholars also doubt that federal preemption will hold up in court, suggesting this debate is just beginning.
Why This Matters for Professionals
Professionals across insurance, risk management, finance, and related sectors are stepping into a future where AI will influence nearly every workflow. Keeping up with evolving regulations isn’t just helpful — it’s essential for protecting your career and your clients.
That’s why institutions like Cameron Academy remain committed to empowering professionals with cutting‑edge licensing education across insurance, real estate, mortgage, finance, medical fields, and more. In an era of rapid AI‑driven change, staying informed is your competitive edge.
Original reporting by journalist John Hilton of InsuranceNewsNet. Follow the author here: John Hilton.
