Insurance commissioners from across the United States have asked the U.S. Senate to reconsider specific provisions in the reconciliation bill known as the “One Big Beautiful Bill Act.”
The bill includes a proposed 10-year ban on state-level regulation and enforcement related to artificial intelligence (AI), which the commissioners argue would interfere with established regulatory practices and create legal and operational uncertainty.
In a letter issued by leaders of the National Association of Insurance Commissioners (NAIC), regulators acknowledged the expanding role of AI in the insurance sector but expressed concern about the bill’s overly broad definition of AI.
They stated that the current language would not only apply to machine learning systems but could also restrict oversight of various analytic tools and software already used in daily insurance operations.
According to the regulators, this restriction would prevent insurance departments from addressing technological developments unrelated to AI and would disrupt ongoing efforts to assess models for fairness and transparency.
They emphasized that state regulators already apply strict standards to ensure insurance rates remain fair and nondiscriminatory, particularly as the use of predictive analytics grows.
The commissioners warned that halting state oversight now would weaken these consumer protections. The moratorium would also interfere with the ability of state regulators to adjust supervisory frameworks as insurer adoption of AI tools expands (see how Artificial Intelligence Promises to Revolutionize P&C Insurance).
They further argued that the proposed federal restriction could destabilize the state-based insurance regulatory system by delaying important regulatory updates, reducing clarity for insurers, and increasing litigation risks.
Insurers could face delays in business operations due to the lack of regulatory clarity and uneven enforcement across jurisdictions.
As evidence of active state-level engagement, the commissioners noted that over half of U.S. states have adopted the NAIC’s model AI bulletin or similar provisions. They added that efforts are ongoing to refine model laws through collaboration with stakeholders.
The letter urged the Senate to remove the AI restrictions from the bill or at least provide an exemption for insurance regulation.
The commissioners warned that, if passed, the provision would likely face legal challenges under the McCarran-Ferguson Act, which prohibits Congress from enacting laws that override state insurance regulations.
Until courts resolve such legal challenges, insurers would be left operating under uncertain rules, exposing the industry to increased regulatory risk, the commissioners concluded.
