Market Regulation and Consumer Affairs (D) Committee Addresses Market-Conduct Modernization, Cybersecurity, and AI

The Market Regulation and Consumer Affairs (D) Committee addressed market-conduct modernization, cybersecurity coordination, consumer use of artificial intelligence in complaints, and reports from its task forces and working groups at the 2026 Summer National Meeting Aug. 14. The most notable substantive discussion was APCIA’s presentation on the growing operational effects of AI-assisted consumer communications.

The meeting agenda included the adoption of the committee’s July 27 minutes; updates on market-conduct modernization and the Cybersecurity Response Framework; an APCIA presentation on consumer AI use in complaints; reports from subordinate groups; and an update on the AI Systems Evaluation Tool pilot.

The committee’s July 27 actions included adoption of a new Market Regulation Handbook chapter on conducting pet insurance examinations, referral of pharmacy benefit manager examination standards to the Market Conduct Examination Guidelines (D) Working Group, and adoption of technical revisions to the long-term care MCAS blank.

Market Conduct Modernization

The committee received an update from the Market Conduct Regulation Modernization (D) Working Group, which is moving from exploratory sessions toward draft recommendations. The working group has considered market-conduct data collection and analysis, stakeholder feedback from property/casualty, health, life, insurtech, and specialty-lines representatives, consumer perspectives, interstate collaboration, the Market Regulation Handbook, and third-party oversight.

The workplan calls for additional sessions on regulator training and workforce development in September, deeper-dive discussions in October, public distribution of draft recommendations in November, and consideration of recommendations at the Fall National Meeting.

APCIA AI Presentation

APCIA presented aggregated, anonymized member observations concerning consumers’ increasing use of AI to prepare complaints, claims correspondence, appeals, valuation disputes, demand letters, and other insurance-related submissions. The findings were largely anecdotal; only 5 percent of respondents reported having formal metrics on AI-assisted communications.

APCIA’s survey found that:

• 86 percent of respondents observed an increase in AI-assisted consumer communications or interactions;
• 86 percent reported at least some operational impact; 43 percent described the impact as significant;
• 67 percent reported increased legal, compliance, or verification burdens;
• 48 percent reported high-volume AI-assisted follow-up communications; and
• 38 percent reported encounters with AI voice agents.

Respondents described AI-assisted communications as longer, more formal, more structured, and more likely to contain legal or regulatory citations requiring verification. Companies reported that the communications can generate additional review time, fact and citation checking, repeated correspondence, escalations to legal or compliance personnel, authentication challenges, and longer claims or complaint-handling timelines.

APCIA also identified potential benefits. Some submissions may be clearer, better organized, and more focused on legitimate issues, enabling consumers to articulate concerns using more accurate policy and insurance terminology. The presentation therefore did not characterize consumer AI use as categorically adverse; instead, it highlighted the operational need to distinguish volume and complexity from substantiated consumer harm.

Questions identified for continued regulator-industry discussion included whether complaint-handling timelines remain appropriate, how repeated AI-generated follow-ups should be treated, what qualifies as materially new information, how AI agents should be authenticated and authorized, and what data regulators and industry should track.

Producer Task Force Charge

The Producer Licensing (D) Task Force reported progress on its new charge to develop a Uniform Appointment Termination for Cause Form. The task force appointed an ad hoc subgroup to prepare an initial draft, and its subsequent discussions focused on the development of the form.

The new charge is intended to improve consistency among states, reduce companies’ administrative burden, provide regulators with faster and more accurate termination notifications, and strengthen consumer protection. For insurers and producers, the work could eventually create a more standardized multistate process for reporting terminations for cause, although the form remains under development.

The task force also continued its survey of state interpretations of “conviction” for purposes of Section 1033 waiver requests. As of the Summer National Meeting, it received 33 state responses addressing treatment of sealed and expunged records, pleas in abeyance, nolo contendere pleas, and diversion programs.

Other Developments

The committee received reports from its task forces and working groups covering antifraud activity, producer licensing, market analysis, MCAS, market-conduct examinations, market-information systems, PBM examinations, speed-to-market initiatives, and market regulation certification.

Among the notable items:

• The Market Conduct Examination Guidelines (D) Working Group adopted the pet insurance examination chapter and is developing a PBM examination chapter, pet insurance standardized data requests, accelerated-underwriting examiner guidance, and revisions to the travel insurance examination chapter;
• The Market Analysis Procedures (D) Working Group continued reviewing homeowners and private-passenger-auto MCAS ratios, including possible new denominators for Ratio 7 based on dwellings insured and autos insured;
• The Speed to Market (D) Working Group continued work on product-coding guidance, the Product Filing Review Handbook, and SERFF modernization; and
• The committee also received an update from the Big Data and Artificial Intelligence (H) Working Group on its AI Systems Evaluation Tool pilot.