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California Today
By the People, for the People
NAIC Expands AI Systems Evaluation Tool Pilot Program to 12 States
Key Updates for Insurers and AI Vendors Supporting Insurers
Mar. 10, 2026 at 6:03pm
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The NAIC Big Data and Artificial Intelligence (H) Working Group has announced important updates about its AI Systems Evaluation Tool and related pilot program. The pilot has expanded to include 12 states, with California being the latest to join. The pilot will run from March to September 2026 and aims to help regulators better understand how insurance companies use AI systems and implement governance practices.
Why it matters
The rapid growth of AI and machine learning in the insurance industry has brought both benefits and risks. The NAIC's AI Systems Evaluation Tool is designed to help regulators identify and evaluate the financial and consumer risks associated with insurers' use of AI systems, complementing existing market conduct, financial analysis, and financial examination procedures.
The details
The pilot will enable regulators to field-test the AI Systems Evaluation Tool, which includes four exhibits: Exhibit A (quantify AI usage), Exhibit B (governance risk assessment framework), Exhibit C (details on high-risk AI systems), and Exhibit D (AI data details). Regulators will prioritize examining high-risk AI systems that could cause serious consumer or financial issues, while paying less attention to low-risk back-office systems. Version 4.0 of the tool includes several key updates, such as clarifying that it does not create new requirements for AI governance risk assessments and reinstating references to unfair trade practices for model testing inquiries.
- The pilot began on March 2, 2026 and will run through September 2026.
- The tool will be updated based on pilot feedback in September–October 2026 and re-exposed for public review, with adoption expected at the NAIC fall meeting in November 2026.
The players
NAIC Big Data and Artificial Intelligence (H) Working Group
A working group under the NAIC's Innovation, Cybersecurity and Technology (H) Committee, tasked with developing tools that enable regulators to continuously identify and evaluate risks related to AI systems used by insurance companies.
Participating States
The 12 states participating in the AI Systems Evaluation Tool pilot program: California, Colorado, Connecticut, Florida, Iowa, Louisiana, Maryland, Pennsylvania, Rhode Island, Vermont, Virginia, and Wisconsin.
What’s next
The pilot will continue through September 2026, with regulators providing public updates at each NAIC national meeting. The tool will be updated based on pilot feedback in September–October 2026 and re-exposed for public review, with adoption expected at the NAIC fall meeting in November 2026.
The takeaway
The NAIC's AI Systems Evaluation Tool pilot program is a significant step in helping regulators better understand and manage the risks associated with insurers' use of AI systems. Insurers and AI vendors supporting the insurance industry should closely monitor the developments and prepare for potential information requests under the tool framework.
