The insurance industry is rapidly adopting AI across its business lines and investment functions. At its recent spring meeting NAIC launched a pilot that will help the regulator figure out how best to supervise AI use across the industry
NEW YORK / June 1, 2026 / — Artificial intelligence is working its way into almost literally everything and insurance is no different. The insurance industry has been an early adopter of artificial intelligence in an effort to streamline customer interaction, operations and even investments. Insurance companies are also working with in-house teams and external vendors to build insuretech products that parse actuarial and claims data as well as managing administrative tasks.
AI adoption has happened rapidly and insurance regulators are now catching up. The National Association of Insurance Commissioners recently held its spring meetings and as a result of those gatherings, the Big Data and Artificial Intelligence (H) Working Group rolled out a pilot project designed to help the regulator get a better understanding of how insurers are using AI. The goal is to ensure that NAIC can effectively supervise the use of AI in the insurance industry and that cybersecurity and governance processes are strong and comprehensive.
Making the model bulletin operational
The NAIC has already released a document on the use of artificial intelligence – “Model Bulletin on the Use of Artificial Intelligence Systems by Insurers” and is now making it operational. The working group has created an AI System Evaluation Tool that is designed to provide the regulator with visibility into how insurers are using AI across business lines and operations.
The tool will be piloted with an initial group of insurers and 12 state insurance regulators who will both make use of the tool and provide feedback. The tool will be used to support regulators with market conduct exams, financial exams, and financial analyses as well as general queries. The pilot will run through September of this year.
Regulators are also working on creating a risk matrix to help assess whether or not the use of AI is putting individual insurers and the insurance system at undue risk.
Taken together, the use of the tool and the risk matrix will provide the structure for a compliance report insurers will eventually provide to regulators about how they are using AI as well as what steps they are taking to ensure proper cybersecurity, policyholder privacy, and governance.
Looking ahead
There is significant potential for automation within the insurance industry. Insurers are already managing some aspects of customer service with AI-assistants, a practice that will likely expand as autonomous AI agents move into the mainstream. Insurers are also using AI to automate parts of the claims process and manage administrative overhead.
Insurance investors also report using AI to help parse investment data and run scenario analysis.
Many insurers are welcoming these developments hoping that artificial intelligence will streamline operations and make predictive modeling easier.
At a recent World Economic Forum event on insurance, Sara Farrup, Head of Global Markets at AXIS Capital said, “to address global challenges and rising complexity, innovation is not optional, it’s critical and imperative for the insurance industry.”
Still, questions remain about how to best ensure that policyholder information remains protected and that insurers aren’t using AI to auto-deny legitimate claims. Harmonization may also be needed between the work the NAIC is doing now and federal policymakers who are at work on a federal framework for AI regulation.
At AIF Global’s upcoming AIF Insurance Investors Forum and Symposium in New York on June 2, insurance investors and industry practitioners will gather to discuss these regulatory developments and more. Learn more here: [link to agenda]