Key Insurance AI Laws
| Jurisdiction | Bill # | Effective Date | Key Requirement | Source |
|---|---|---|---|---|
| Oklahoma | SB1541 | Nov 01, 2022 | Oklahoma's SB 1541 (2022) lets fully autonomous vehicles drive on public roads without a human driver when the automated... | Official text |
| Nebraska | LB77 | Jan 01, 2026 | Nebraska's LB 77 (2025) adopts the Ensuring Transparency in Prior Authorization Act. Its AI section says an artificial i... | Official text |
| Washington | SB5395 | Jun 11, 2026 | Chapter 157, Laws of 2026 regulates AI in health insurance prior authorization (RCW 48.43.830 for carriers and RCW 41.05... | Official text |
Insurance AI Compliance FAQ
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Does the Colorado AI Act apply to insurance?Yes, with an insurer carve-out. SB 24-205, whose duties became operative June 30, 2026, covers insurance decisions but deems an insurer subject to C.R.S. 10-3-1104.9 and the Commissioner's rules under it to be in full compliance. SB 26-189, signed May 14, 2026, repeals and replaces SB 24-205 effective January 1, 2027; it covers automated decision-making technology that materially influences consequential decisions, including insurance, but insurers and affiliated entities subject to 10-3-1104.9 are in compliance with it in the practice of insurance. Other deployers must give pre-use notice and, after an adverse outcome, a plain-language explanation plus the opportunity to correct personal data and request meaningful human review.
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Which states regulate AI in insurance underwriting?Colorado SB 21-169 (2021) bars insurers from using external consumer data, algorithms or predictive models in ways that unfairly discriminate on protected characteristics, with testing rules adopted by the commissioner of insurance. Colorado SB 26-189 (from January 1, 2027) lists insurance as a consequential-decision domain, though insurers subject to the SB 21-169 framework (C.R.S. 10-3-1104.9) are deemed in compliance. Alabama SB 63 (effective October 1, 2026) requires prior-authorization denials based on medical necessity to be made by a licensed physician or other qualified health care professional. The NAIC Model Bulletin on AI (adopted December 2023) provides a framework that state insurance departments are implementing through regulation and examination guidance.
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Are AI claims processing tools regulated?Yes, in some states. Alabama SB 63 requires that decisions to deny, delay or modify prior-authorization requests for medical necessity be made by a licensed physician or other qualified health care professional who can evaluate any AI recommendation. Colorado SB 21-169 requires insurers to test whether their use of external data and predictive models unfairly discriminates. The NAIC Model Bulletin recommends that insurers maintain human oversight and audit AI claims tools for unfair outcomes.
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What is the NAIC AI model bulletin?The National Association of Insurance Commissioners (NAIC) adopted a Model Bulletin on the Use of AI Systems by Insurers in December 2023. It establishes expectations that insurers using AI must: maintain governance frameworks, conduct testing for unfair discrimination, provide consumer transparency, and ensure human oversight of AI-driven decisions. While not law itself, state insurance departments use it as guidance for examinations and enforcement.
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Do insurers need to disclose AI use to consumers?Not uniformly. Colorado SB 26-189 requires pre-use notice for automated decision-making technology in consequential decisions from January 1, 2027, but insurers subject to C.R.S. 10-3-1104.9 are deemed in compliance in the practice of insurance. The NAIC Model Bulletin recommends transparency about AI use.
Insurance AI Compliance Checklist
- Inventory automated decision tools used in underwriting, pricing, and claims (Colorado SB 26-189 (from Jan 1, 2027))
- Test AI models for unfair discrimination across protected classes (Colorado SB 21-169, NAIC Model Bulletin)
- Maintain human oversight of AI-driven claims and coverage decisions (Alabama SB 63, NAIC Model Bulletin)
- Notify consumers when AI contributes to insurance decisions (Colorado SB 26-189 (from Jan 1, 2027))
- Establish an AI governance framework with board-level accountability (NAIC Model Bulletin)
- Document and audit AI model outputs for adverse consumer outcomes (NAIC Model Bulletin)
All Insurance AI Bills (4)
Making improvements to transparency and accountability in the prior authorization determination process.
Chapter 157, Laws of 2026 regulates AI in health insurance prior authorization (RCW 48.43.830 for carriers and RCW 41.05.845 for public employee plans). AI may not be the sole means of denying, delaying or modifying care, and algorithms may approve requests…
Adopt the Ensuring Transparency in Prior Authorization Act and provide for insurance and medicaid coverage of biomarker testing
Nebraska's LB 77 (2025) adopts the Ensuring Transparency in Prior Authorization Act. Its AI section says an artificial intelligence-based algorithm may not be the sole basis for a utilization review agent's decision to deny, delay or modify health care…
A bill for an act relating to utilization review organizations, prior authorizations and exemptions, medical billing, and independent review organizations.
The bill addresses utilization review organizations, prior authorizations, and medical billing practices in Iowa.
Autonomous vehicles; allowing fully automated vehicles to operate on public roads. Effective date.
Oklahoma's SB 1541 (2022) lets fully autonomous vehicles drive on public roads without a human driver when the automated driving system is engaged and the vehicle can reach a minimal risk condition if the system fails, can obey traffic laws and meets federal…
AI Regulation in the Insurance Industry
State legislatures across the United States are actively developing artificial intelligence regulations that directly affect Insurance companies and practitioners. These laws address a wide range of concerns including algorithmic discrimination, automated decision-making, data privacy, consumer transparency, and the use of high-risk AI systems that can materially affect individuals' lives. As of 2026, 4 states have introduced or enacted legislation with direct implications for Insurance.
Compliance requirements vary significantly by state, making it essential for Insurance legal and compliance teams to track both enacted laws and pending bills. Key obligations may include conducting algorithmic impact assessments, providing consumer disclosures when AI is used in consequential decisions, implementing risk management programs, and ensuring human-in-the-loop oversight for high-stakes outcomes. Penalties for non-compliance can be substantial — see our Penalty Tracker for details by state.
To assess your organization's specific compliance obligations under current and upcoming Insurance AI regulations, use our Am I Affected? tool. For upcoming enforcement dates, visit the Deadlines page or the Deadline Calendar. Use the Bill Comparator to analyze differences between state laws side-by-side.