Insurance industry groups and state lawmakers are reacting along familiar fault lines to President Donald Trump’s executive order aimed at reshaping how artificial intelligence is regulated in the United States.
Health insurers largely welcomed the move. State insurance legislators did not.
The order seeks to establish a national framework governing AI use and to create an artificial intelligence litigation task force empowered to challenge existing state laws.
The White House framed the effort as a response to what it called a fragmented regulatory environment that complicates compliance and injects ideological bias into AI systems.
According to the order, state-by-state AI laws increasingly impose conflicting obligations and, in some cases, reach beyond state borders. The administration argues that this patchwork disrupts interstate commerce and technology development.
To counter that, the White House said it will work with Congress on a minimal federal standard. State laws that conflict with the order’s policy objectives would be barred.
Within 30 days, the attorney general must form an AI litigation group tasked with challenging state AI statutes viewed as unconstitutional, preempted by federal authority, or otherwise unlawful.
Over the following 90 days, the federal government will publish an assessment of state AI laws and identify those it believes warrant litigation.
The order also ties federal funding to compliance. Within the same 90-day window, the Department of Commerce will issue guidance linking eligibility for remaining Broadband Equity Access and Deployment Program funds to state AI policy.
States with what the order calls “onerous AI” laws could lose access to nondeployed funding, to the maximum extent permitted under federal law.
Health insurers quickly voiced support. AHIP said a federal approach would reduce compliance burdens and operating costs as AI adoption accelerates across health care.
According to AHIP, a consistent national framework matters as insurers rely more on AI in claims, care management, and administrative processes. The group said guardrails should stay high level, flexible, and risk-based, allowing technology to change without constant regulatory rewrites.
AHIP also urged regulators to protect proprietary information, lean on industry standards, and limit audits or third-party reviews to high-risk AI uses. The group warned against creating new private rights of action tied to AI regulation, arguing that litigation risk could slow adoption.
The National Council of Insurance Legislators said it was deeply troubled by the order’s attempt to curb state authority over AI.
In a statement, NCOIL officers said limiting state regulation undercuts lawmakers responding directly to constituent concerns.
The tension isn’t new. When the White House floated a 10-year moratorium on state AI laws earlier this year, NCOIL pushed back hard. The group said residents continue to press state lawmakers for safeguards against unknown risks tied to AI systems already in use.
From the state perspective, local policy solutions remain necessary, especially as AI decisions affect insurance underwriting, claims handling, and consumer protections differently across markets.
According to Beinsure analysts, the divide reflects a deeper struggle over who sets the rules for AI in insurance. Insurers favor uniformity and scale.
States resist surrendering oversight in an area where they traditionally regulate risk and consumer protection. The coming months may decide which side gains ground.
