Insurance commissioners across the United States have recently requested that the Senate re-examine the provisions of the “One Big Beautiful Bill Act” settlement bill, which proposes a 10-year suspension of state-level regulation of artificial intelligence (AI). Regulatory agencies believe that this ban will interfere with the existing regulatory system and increase legal and operational uncertainty.
The National Association of Insurance Commissioners (NAIC) stated in the letter that although the application of AI in the insurance industry is becoming increasingly widespread, the bill’s broad definition of AI may restrict the regulation of existing analytical tools and software. They warned that this would hinder the regulatory authorities’ efforts to assess the fairness and transparency of models, and weaken consumer protection measures.
The committee members emphasized that the state regulatory agencies have established strict standards to ensure that insurance rates are fair and non-discriminatory, especially in the context of the widespread use of predictive analysis. The suspension of regulation would hinder the ability of each state to adjust its framework and might trigger litigation risks, thereby undermining the stability of the insurance regulatory system.
Currently, more than half of the states in the United States have adopted the AI model regulations or similar provisions from the NAIC. Regulatory agencies are working with stakeholders to improve the regulations. They are calling on the Senate to remove the AI restrictions or at least exempt insurance regulation to avoid legal conflicts.
The committee members warned that if the bill is passed, it may face legal challenges under the “McCarran-Ferguson Act”, which prohibits federal laws from overriding state insurance regulations. Before the court’s ruling, insurance companies will face rule uncertainty, further increasing industry risks.
Related Topic:
