AI Regulation: What Insurance Agents Need to Know in 2025

Artificial Intelligence has exploded across the insurance industry, but with its growth comes something every agency needs to pay attention to: regulation. As states, carriers, and federal entities explore rules around AI usage, agents must understand what’s changing — and how to stay compliant while still taking advantage of AI’s advantages.

This post breaks down AI regulation in a clear, agent-friendly way so you can confidently adopt AI without putting your agency at risk.

1. Why AI Regulation Matters for Insurance Agencies

Insurance is one of the most regulated industries in the world. With AI now touching underwriting, claims, marketing, and customer service, regulators want to ensure:

• Consumers are treated fairly

• Automated decisions are transparent

• AI doesn’t introduce discrimination

• Data is secure and properly handled

For independent agencies, new rules could affect how you market, how you use client data, and which AI tools you can implement.

2. What Regulators Are Focusing On

Across the U.S., there are a few key themes emerging:

Transparency

Carriers and agencies must know how an AI system makes decisions — especially if it affects pricing or eligibility.

Bias Prevention

Models must be tested to ensure they aren’t unintentionally discriminating based on:

• Race

• Gender

• Age

• Income

• Zip code

This applies to underwriting, targeting, and claims decisions.

Data Privacy

AI tools that store or process personal data must comply with:

• GLBA

• State privacy laws

• Common carrier compliance rules

• Vendor security requirements

Agencies should understand where data goes and how it’s stored.

Human Oversight

Most regulations require that humans remain involved in decisions affecting clients — especially in underwriting or claims.

3. The NAIC Model Bulletin: What Agents Should Know

In late 2023 and expanding through 2025, the NAIC introduced model guidance around the responsible use of AI in insurance. Key points include:

• Insurers and agents must monitor AI for fairness

• AI systems require documentation and accountability

• Agencies must maintain vendor oversight for AI tools they use

• Consumers may request explanations for AI-driven decisions

While this bulletin primarily targets carriers, agencies are part of the AI lifecycle, which means compliance matters.

4. What This Means for Independent Agencies

Even if you’re not running advanced underwriting models, you are using tools that handle client data.

Here’s what agencies should implement now:

1. AI Usage Policy

A simple internal document outlining:

• What AI tools your team is allowed to use

• What data can and cannot be entered

• Requirements for reviewing AI-generated content

This protects the agency and ensures consistency.

2. Vendor Due Diligence

Before adopting AI tools, confirm:

• Where the data is stored

• Whether data is used for training

• Security certifications

• How long the data is retained

This is especially important for tools that touch PHI, PII, or financial data.

3. Human Review of AI Output

AI is powerful, but agencies must ensure:

• Emails are reviewed before sending

• Summaries are validated

• Client-facing communication is accurate

• AI-driven recommendations are checked

This isn’t optional — it’s regulatory expectation.

4. Documentation

If your agency uses AI for workflows or customer communication, it’s smart to document:

• What tools you use

• What tasks AI assists with

• Training and oversight procedures

This creates a compliance audit trail.

5. How Agencies Can Use AI Safely (and Still Reap the Benefits)

AI regulation doesn’t mean agencies should avoid adopting AI. It simply means you must use it responsibly.

Safe, compliant AI includes:

• Drafting emails

• Summarizing documents

• Automating administrative tasks

• Creating marketing content

• Enhancing CRM workflows

AI becomes risky only when agents rely on it for decision-making rather than supporting work.

6. Why Partnering With an AI Consultant Reduces Risk

Most agencies don’t have the bandwidth to study AI laws or design compliant systems. Professional AI implementation helps agencies:

• Select safe, compliant tools

• Establish an internal AI use policy

• Train staff to use AI responsibly

• Build automations that follow industry standards

• Maintain documentation for audits

With the right partner, you can confidently use AI while staying ahead of regulatory expectations.