Insurance industry groups and state lawmakers are split over President Donald Trump’s Dec. 11 executive order aimed at creating a national regulatory framework for artificial intelligence and curbing state-level AI laws.
The order directs the federal government to pursue a minimal national standard for AI regulation, arguing that a patchwork of state laws creates compliance challenges and, in some cases, imposes requirements that introduce ideological bias into AI models or extend state authority beyond their borders.
Under the proposal, state laws that conflict with federal AI policy would be barred, according to a report from BestWire.
Federal push toward uniform AI rules
As part of the order, the attorney general is required to establish an AI litigation task force within 30 days to challenge existing state AI laws that are deemed unconstitutional, preempted by federal authority or otherwise unlawful. Within 90 days, the administration plans to publish an evaluation of state AI laws and identify those that could be targeted for litigation.
The Department of Commerce is also expected to issue guidance within 90 days linking eligibility for certain Broadband Equity Access and Deployment Program funds to state AI policies. States with what the administration describes as “onerous” AI laws could be deemed ineligible for remaining, nondeployed funds to the maximum extent permitted by federal law.
Health insurers back federal approach
Health insurers largely welcomed the move, saying a consistent national framework would reduce regulatory burden and costs. America’s Health Insurance Plans said federal AI regulation could support innovation while maintaining safeguards for patients and providers, the report said.
AHIP said any AI framework should rely on high-level, risk-based guardrails, allow flexibility as technology evolves, protect proprietary information and defer to industry standards. The group also cautioned against broad third-party audits or private rights of action, arguing that oversight should be limited to high-risk uses of AI.
State lawmakers raise federalism concerns
State insurance lawmakers were more critical. The National Council of Insurance Legislators said the order threatens states’ ability to regulate emerging risks tied to AI and respond to constituent concerns. NCOIL officers said state lawmakers have been asked to address safeguards around AI’s unknown impacts and warned against limiting state-based policy solutions.
NCOIL previously opposed a proposal floated by the White House in May to impose a 10-year moratorium on state AI legislation and regulation, arguing that states play a key role in developing and testing policy responses, BestWire reported.
The National Association of Insurance Commissioners has also expressed concern about federal preemption in this area, warning earlier this year that a prolonged moratorium on state action could lead to unintended consequences. The executive order comes as the NAIC continues to debate whether to advance a model AI law, with many regulators and industry participants saying existing regulatory authority may already be sufficient and that a model law could be premature.
Requests for comment from the NAIC and several major insurance trade groups, including the American Property Casualty Insurance Association, the American Council of Life Insurers and the National Association of Mutual Insurance Companies, were not returned.
