NAIC Opposes Federal Moratorium on AI Regulation in Insurance Sector

On June 4, 2025, the National Association of Insurance Commissioners (NAIC) submitted a letter to US Senate leadership opposing a provision in the House-passed budget reconciliation bill that would impose a 10-year federal moratorium on state regulation of artificial intelligence (AI) in insurance.

In the letter, the NAIC urges the Senate to eliminate the provision, citing concerns that the moratorium would prevent state insurance regulators from overseeing AI and related technologies used in insurance markets. The organization argues that the provision's broad language could unintentionally apply to widely used software and analytical tools such as spreadsheets, databases, and predictive models.

The NAIC notes that such tools are already in use across various insurance functions, including underwriting, rating, and claims handling. According to the letter, restricting regulatory oversight of these technologies for a decade would significantly impair regulators' ability to monitor market practices and protect consumers.

The association also raises concerns about federal preemption of state regulatory authority. It highlights the potential conflict with the McCarran-Ferguson Act, which delegates the regulation of insurance to the states unless federal law specifically addresses insurance business.

The letter emphasizes the importance of allowing state regulators to continue supervising technological developments in insurance, particularly as AI use becomes more widespread. The NAIC encourages Congress to support innovation in the sector without limiting the oversight needed to ensure transparency, accountability, and consumer protection.

The full letter is available here.