Trump Executive Order on AI Creates Uncertainty for Insurance Landscape
The recent executive order proposing unified federal governance of AI laws has created significant uncertainty for insurance companies, many of whom were already unsure about their own compliance requirements. Legal experts across the U.S. have expressed concerns about how AI used by insurers will be regulated.
Impact of the Executive Order
According to Karin Aldama, an attorney and shareholder at Gallagher & Kennedy, until the order is fully implemented and a federal regulatory scheme is in place, insurers will have to navigate a “dual-track environment.” This means they must comply with existing state regulations while preparing for forthcoming federal requirements.
Additionally, Scott Kosnoff, a partner at Faegre Drinker, cautioned that insurers should not consider the order as a “get-out-of-jail-free card,” as this would lead to poor outcomes. He emphasized that insurance companies must maintain vigilance regarding their AI governance and risk management to effectively mitigate various risks.
Challenging State-Issued AI Frameworks
In December 2025, President Donald Trump signed the executive order titled “Ensuring a National Policy Framework for Artificial Intelligence.” The order aims to establish a unified federal AI framework and create a federal AI Litigation Task Force to address individual state AI laws.
Gina Clausen Lozier, an attorney and founding partner of Clausen Choquette, explained that the regulation seeks to ensure accountability, transparency, and oversight of the actions taken by insurance companies, particularly regarding the use of algorithms and machine learning-generated information.
Potential Benefits and Concerns
Aldama believes the executive order could be a “net positive” for the insurance industry if it successfully eliminates the current “patchwork of state regulations.” She noted that larger national insurers may have a competitive advantage over smaller regional companies, as they likely possess more robust systems for adapting their compliance models swiftly.
However, Paige Waters, a partner at Troutman Pepper Locke, expressed concerns that the executive order might interfere with states’ rights to regulate insurance. This could lead to litigation under the McCarran-Ferguson Act of 1945, which allows states to self-govern their insurance industries.
Compliance Strategies
In light of the uncertainty, legal experts recommend that insurers continue complying with state regulations while also carefully monitoring the enforcement of the executive order by federal agencies. Aldama advises insurers to pay attention to potential disputes between state and federal governments regarding the AI executive order.
Insurers should be prepared to adapt their systems and processes in underwriting and claims handling to comply with any new regulations that may arise. As Waters noted, litigation regarding the executive order could take considerable time to resolve, emphasizing the importance of ongoing compliance with state laws until further notice.
In summary, the executive order on AI presents both challenges and opportunities for the insurance landscape, necessitating a proactive approach to compliance and risk management in an evolving regulatory environment.
