12 States Launch First Government Examination of AI Insurance Claims

State insurance regulators launched the first formal government examination of AI insurance claims decisions in March 2026. The 12-state pilot, organized through the National Association of Insurance Commissioners' Big Data and Artificial Intelligence Working Group, targets AI systems that determine total-loss thresholds, assess damage, and set parts valuations.

California, Colorado, Connecticut, Florida, Iowa, Louisiana, Maryland, Pennsylvania, Rhode Island, Vermont, Virginia, and Wisconsin are participating in the program, which runs through September 2026. NAIC survey data shows 88 percent of auto insurers currently use or plan to use AI to evaluate claims — a rate that left regulators with a shrinking window to establish oversight.

The program's AI Systems Evaluation Tool examines four areas: how extensively an insurer uses AI, how those systems are governed internally, the specifics of systems regulators classify as high-risk, and the data those systems rely on. One provision requires insurers to take full responsibility for AI platforms purchased from third-party vendors, extending liability to the insurer deploying the system rather than the vendor that built it.

The insurance industry has formally objected. A joint letter from trade groups filed in December 2025 argued the program is "voluntary for regulators while compulsory for companies" and warned that carriers could face penalties based on findings from an evaluation tool that had not been finalized. The pilot proceeded despite those objections.

Regulators plan monthly meetings to share findings, with tool revisions based on pilot results before a public review period. A nationwide rollout is targeted for the NAIC's fall meeting in November 2026, which would make this the first coordinated regulatory framework for claims processing AI in financial services at the state level.

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Read the full analysis: Visa, Mastercard Launch Financial Automation for AI Agents

Sources

• "Regulators Open First Examination of Insurer AI Behind Total-Loss Decisions and Claims Payouts" — Autobody News