2025 insurance regulatory outlook: Weathering uncertainty

Insurers are likely to face numerous challenges, heightened risks, and potential record-breaking loss events in 2025. Agile management will be crucial, with historical cooperation between the insurance industry, state regulators, and standard-setting organizations playing a pivotal role in stabilizing the property casualty sector.

State regulators will oversee insurers’ responses to domestic, geopolitical, and market challenges, enforcing compliance and potential new state legislation as needed. Solvency and consumer protections will need to be balanced against increasing climate risks. More challenging compliance demands in sectors like national security and cybersecurity may prompt decisive actions against significant cyber breaches. An intensified focus on artificial intelligence (AI) applications, the cybersecurity market, the intersection of the homeowners mortgage market and affordability and coverage concerns in the property casualty insurance market, and life insurance and annuity sales practices could lead to Congressional hearings, probes or new legislation at the state or even federal level. Almost half of the states have adopted NAIC guidance on AI, and market conduct exams that examine AI usage within the context of state statutes could commence soon.

Insurers can engage and collaborate with regulators and lawmakers, sharing detailed information to fend off market and consumer threats.

For our 2025 insurance regulatory outlook, we’ve visited the impacts of four major areas influencing the industry after considering an insurer’s position within the current regulatory environment:

• Managing data amid innovation and threats
• Safeguarding and improving solvency
• Focusing on customer-centric regulation
• Tackling climate change risk and resilience challenges

As we move into 2025 under a new administration with an expansive agenda, the focus will likely be on state and federal regulation shaped by climate risk, cybersecurity threats, and the accelerated use of AI in the insurance lifecycle. Collaboration between industry and regulators will be crucial to address vulnerabilities and keep pace with technological advancements.

Strengthening regulatory and market alliances

The coming year will bring rapid technological growth and rising risks from cyberthreats, climate change, and geopolitical stressors. Insurers would do well to embrace and amplify their partnerships in the state, federal, and international policy worlds, as well as in their own markets and ones in which they’d like to expand, accepting and helping to shape the regulatory guardrails to determine whether their business oversight frameworks work best to meet current, growing, and emerging challenges.

If you are interested in learning more about the insurance industry, check out our 2025 financial services insurance outlook here.