Governing Algorithmic Insurance: Reconciling the EU AI Act with Insurance-Specific Regulation

Artificial intelligence (AI) is reshaping the insurance industry, driving automation in underwriting, claims handling, and risk assessment. These technological developments offer enhanced efficiency and innovation, but they also raise complex legal questions regarding transparency, fairness, bias, and accountability. Within the European Union, existing regulatory
frameworks—chiefly Solvency II and the Insurance Distribution Directive (IDD)—provide prudential and conduct-of-business safeguards but were not designed with algorithmic systems in mind. In response to emerging challenges, the EU adopted the Artificial Intelligence Act in 2024, establishing a horizontal, risk-based legal framework applicable across all sectors, including insurance. This article provides an EU-focused legal analysis of how the AI Act interacts with insurance regulation. It examines both normative frictions and complementarities, with a particular focus on governance obligations, high-risk classifications, and institutional oversight. The paper argues that achieving coherence between the AI Act, Solvency II, and the IDD requires integrated compliance strategies and inter-authority coordination,
particularly given the overlapping mandates of EIOPA, the AI Office, and national supervisors. While grounded in EU law, the discussion offers comparative insights for jurisdictions addressing similar issues of algorithmic governance. It contributes to broader debates on how general AI regulation can be integrated within sectoral legal frameworks, providing a European perspective that may be relevant to global policymakers.