Related Practices
AI Update: NAIC Launches Multi-State Pilot of AI Systems Evaluation Tool
The Zelle Lonestar LowdownJune 30, 2026
The National Association of Insurance Commissioners (NAIC) has launched a collaborative pilot program to test its AI Systems Evaluation Tool, a structured framework designed to help state regulators assess how insurance companies use artificial intelligence and whether their governance practices effectively manage potential risks. The pilot will run from March 2026 through September 2026, involving twelve participating states: California, Colorado, Connecticut, Florida, Iowa, Louisiana, Maryland, Pennsylvania, Rhode Island, Vermont, Virginia, and Wisconsin.
According to one report, NAIC has stated that “existing insurance laws apply to AI-driven decisions the same way they apply to decisions made by human adjusters. Where the AI touches the policyholder, the regulatory interest follows.”
The NAIC pilot aims to determine whether the Tool helps insurers clearly communicate their AI governance to regulators, supports ongoing improvement of the Tool, and helps create long-term recommendations for market conduct and financial risk assessment processes.
Participating states will use the Tool in market conduct exams, financial analysis, and financial examinations across property/casualty, life, and health lines of business. States will follow the principle of proportionality, focusing more on high-risk AI systems and less on low-risk back-office applications.
To support collaboration, states will participate in monthly coordination calls to avoid duplicative requests and share lessons learned. Training on AI, the Tool, and related topics will be provided to participating states and their staff. Any information requested from insurers will be protected under the confidentiality rules of the administering state.
Looking ahead, the NAIC plans to update the Tool based on pilot feedback in September and October 2026, issue a revised version for public review, and consider the updated Tool for adoption at the Fall National Meeting in November 2026. Notably, participation in the pilot does not preclude states from performing additional or other AI regulatory actions.
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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
