Insurance Industry Fights State AI Regulation Freeze
Insurance Industry Voices Strong Opposition to AI Regulation Moratorium
Key industry groups are mounting resistance against a proposed 10-year freeze on state-level artificial intelligence regulations, warning it could disrupt insurance markets and leave consumers vulnerable during rapid technological change.
The Controversial Proposal
The provision, embedded within a massive tax bill dubbed "One Big Beautiful Bill," would suspend existing state AI laws and block new regulations for a decade. This has drawn sharp criticism from insurance professionals who argue state oversight is critical for consumer protection.
Image source note: The image is generated by AI, and the image licensing service provider is Midjourney
Industry Pushback Intensifies
The Professional Insurance Agents Association (PIA) escalated concerns in a June 16 letter to Senate leadership, urging removal of the moratorium or at least an exemption for insurance regulation. CEO Mike Skiados emphasized insurers already operate under robust state frameworks.
"State insurance regulators have demonstrated their ability to adapt to technological changes while maintaining strong consumer protections," the letter stated.
Existing Regulatory Framework
Nearly 30 states have adopted the National Association of Insurance Commissioners' (NAIC) model for insurer AI use, which requires governance plans aligned with state and federal laws. In early June, NAIC leaders warned Congress that freezing state rules would:
- Undermine consumer safeguards
- Stifle innovation
- Eliminate flexibility for local market needs
The NAIC also raised concerns about the bill's overly broad AI definition, questioning whether it might inadvertently cover routine analytical tools used in underwriting and claims processing.
Widespread Opposition Grows
The American Insurance Technology Council joined critics, calling the proposal "dangerous" during this period of rapid AI adoption. Meanwhile, attorneys general from 40 states collectively urged Congress to scrap the provision in May.
The National Council of Insurance Legislators added its voice on June 16, arguing the freeze would:
- Disrupt carefully balanced insurance markets
- Tie lawmakers' hands on emerging issues
- Fail voters demanding protection from AI risks
Key Points
- 🚨 Industry united: PIA, NAIC, AITC and 40 AGs oppose regulatory freeze
- ⚖️ State models working: Nearly 30 states use NAIC's AI governance framework
- ⏳ Timing critical: Moratorium would block responses during peak AI transformation