Insurance Industry Pushes Back on Federal AI Regulation Moratorium

Insurance trade groups and state regulators are uniting against a ten-year prohibition on state artificial intelligence (AI) oversight tucked into the ‘One Big Beautiful Bill.’ Introduced as part of a sweeping tax and budget reconciliation package, the moratorium would preempt existing AI rules in dozens of states and block any new legislation through 2035. The National Association of Professional Insurance Agents (PIA) has urged the Senate to strip this language, arguing that insurers are already subject to robust state governance and that further delay would weaken market stability and consumer trust.

The National Association of Insurance Commissioners (NAIC) underscores this point in its own letter, noting that nearly 30 states have adopted its AI governance model requiring carriers to align with both state and federal standards. According to NAIC leadership, state-level regulation has successfully balanced consumer protections with the flexibility insurers need to pilot new data-driven products. They caution that the bill’s broad AI definition could inadvertently capture routine analytical tools—such as stochastic forecasts and rate-setting software—threatening to halt essential underwriting and claims-management processes.

Beyond PIA and NAIC, the American InsurTech Council (AITC) also decries the moratorium, warning of a ‘dangerous vacuum in oversight’ during a period of rapid technological evolution. State attorneys general from 40 jurisdictions have similarly urged Congress to preserve state authority, and the National Council of Insurance Legislators (NCOIL) warns that a federal ban would disrupt insurance markets and leave consumers unprotected against AI’s unknown risks.

As AI transforms underwriting, pricing and customer service, these industry and regulatory voices stress that continued state innovation and oversight are vital. They contend that a one-size-fits-all federal pause would not only undercut established consumer safeguards but also derail ongoing efforts to harness AI for more accurate risk assessment and enhanced policyholder experiences.