The NAIC has published an open letter to the Senate opposing the reconciliation bill that would place a ten-year moratorium on state regulatory authority of artificial intelligence (AI) systems. The AI section is one part of the “One Big Beautiful Bill Act.” The bill has already passed through the House.

NAIC argues that state regulation of insurance has a long history of effectiveness, as each state can tailor to and respond to local needs and evolving market conditions. NAIC also recognizes the benefits that AI systems bring to the industry and policyholders, but is worried that the moratorium may have unintended consequences.

First, they believe the definition of AI included in the bill is too broad and may apply to a wide variety of processes used by insurers, including calculations, forecasts in Excel sheets, databases, and InsurTech systems. The moratorium also restricts state oversight and could disrupt processes that state regulators use to ensure fairness and transparency in the marketplace, including making sure premiums charged are not inadequate or excessive. Finally, the NAIC has already developed a Model Bulletin on the use of AI Systems by insurers, which has been adopted by over half of all states. The bulletin states that decisions made by AI systems must comply with applicable insurance laws and outlines general guidelines for AI system programs that insurers are expected to implement.