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By Stacy Braverman, Senior Regulatory Analyst, RegEd |
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About the Author: Stacy Braverman is a Senior Regulatory Compliance Analyst concentrating on insurance regulatory change. Stacy has been in the insurance industry for 40 years with experience in legislative affairs and regulatory compliance. She was previously the Chief Legislative and Compliance Officer for a CNA subsidiary who led in the development of compliance alerts within their operations system. Her experience includes serving as the Chair of an industry association government affairs committee, and as a contributor in the development of NAIC Model Act and Regulation language. She also ran a licensing and compliance consulting service providing support for brokers and producers, and the development of suspected fraud training. Stacy has worked with the CODE product for over 13 years.
More than 2,650 changes in state insurance regulations occur in 2024, closing out a busy election year.
In 2024, states once again issued a substantial volume of statutes, regulations, bulletins, and notices. Combined with federal regulatory changes, insurance carriers were tasked with managing over 3,300 regulatory updates. This influx occurred despite 2024 being an election year—which typically sees reduced legislative activity—and four states (Montana, Nevada, North Dakota, and Texas) not holding sessions. While the total regulatory changes were fewer than 2023, they were 8% greater than 2016, the last non-COVID presidential election year. The overall trajectory of regulatory change in the insurance industry remains on an upward path.
Adding to the complexity for compliance teams is the growing reliance on omnibus bills and rules. These comprehensive legislative and regulatory packages can make it increasingly challenging for insurers to track and implement necessary changes. In 2024 alone, 22 omnibus measures impacted the insurance sector, intensifying the burden on compliance professionals.
In this blog post, we’ll examine the key drivers behind the regulatory activity in 2024 and highlight expected trends in the evolving insurance regulatory landscape.
1. Mandated Benefits and Benefits Managers in Health Insurance:
In 2024, states continued to expand and refine legislation around mandated health insurance benefits, introducing or enhancing requirements for a range of services. These mandates included coverage for doulas, donor human milk, biomarker testing, cancer screenings, hearing aids, and abortion and reproductive services, with particular focus on cost-sharing rules, including outright prohibitions on cost-sharing for certain services. Additional mandates covered treatment related to stillbirth and miscarriage, over-the-counter contraceptives, and gender-affirming care.
Notably, several states implemented protections against discrimination targeting providers who offer gender-affirming services that may be illegal in other states. These protections extended to medical malpractice insurance and provider network participation, ensuring that such providers are not unfairly excluded or penalized.
States also intensified efforts to regulate health care benefit managers, pharmacy benefit managers (PBMs), and pharmacy administrative services organizations. These regulations focused on key areas such as licensing, network adequacy, contracting practices, reporting requirements, audits, and consumer protection.
Looking ahead, we anticipate that these regulatory trends will persist as more states move to codify consumer protections and key provisions of the Affordable Care Act (ACA) into state law, while continuing to strengthen oversight of benefits managers.
2. Climate Risk and Property Insurance Market Fallout:
Climate risk continues to be a primary driver of regulatory activity in the insurance sector. The past year brought numerous natural disasters, including tornadoes, severe storms, flooding, Hurricanes Helene and Milton, and wildfires, prompting a wave of emergency orders, requests for insurer flexibility, and data calls that required rapid responses from insurers. Additionally, several states enacted hurricane mitigation measures to minimize future risks.
Efforts to stabilize struggling property insurance markets remained a priority, particularly in Florida, California, Louisiana, and Texas, where market volatility continues to pose significant challenges. A key area of regulatory focus has been the cancellation and non-renewal of property insurance policies, especially for residential properties. States have introduced new restrictions, such as prohibiting cancellations solely based on the age of a structure’s roof, and have revised rules governing notice content and extended notice periods for policyholders. Importantly, this regulatory activity is not confined to coastal or wildfire-prone regions, as similar measures have been observed in Michigan, Indiana, Minnesota, Kentucky, Oklahoma, Missouri, and Pennsylvania.
While large-scale natural catastrophes (“nat cats”) like hurricanes drive significant claims and influence property insurance rates, increasing regulatory attention is being directed toward so-called “kitty cats.” These secondary perils—severe convective storms that quickly form and dissipate across the Midwest and Great Plains, often producing hailstorms and tornadoes—are becoming more frequent and destructive. In 2022, the cumulative damage from these smaller-scale events matched the impact of Hurricane Ian, underscoring their growing influence on the property insurance market. The mounting losses from “kitty cats” are putting additional pressure on insurers, affecting both policy availability and premium costs.
As these climate-driven risks continue to escalate, the insurance industry faces heightened regulatory scrutiny aimed at mitigating the fallout, ensuring market stability, and protecting consumers.
3. Cybersecurity and Artificial Intelligence
Cybersecurity remains a top regulatory priority as new threats emerge, including social engineering attacks targeting IT help desk personnel and the use of artificial intelligence (AI) to both facilitate and prevent data breaches. Recent guidance has highlighted these evolving risks, with New York leading the charge by issuing comprehensive directives. It is expected that other states will follow New York’s lead, resulting in broader regulatory activity across the country.
In parallel, regulatory attention on artificial intelligence continues to grow. States are increasingly adopting the NAIC’s “Principles of Artificial Intelligence”, which emphasize ethical AI use in insurance. A key focus is mitigating algorithmic discrimination—instances where AI-driven decisions result in differential treatment or adverse impacts on individuals or groups, potentially violating anti-discrimination laws. Regulators are working to ensure that AI applications in insurance uphold fairness, transparency, and compliance with existing legal frameworks.
Given the rapid evolution of cybersecurity threats and AI technologies, we anticipate continued and intensified regulatory efforts in these areas, aimed at safeguarding both consumer interests and the integrity of the insurance industry.
4. Key Areas of Expected Regulatory Focus:
The National Association of Insurance Commissioners (NAIC) has outlined several key regulatory priorities for 2025, reflecting the evolving dynamics of the insurance industry. These priorities offer a glimpse into future regulatory actions and include:
- Climate Risk and Resilience
- Insurer Financial Oversight and Transparency
- Marketing of Insurance Products
- Data and Reporting Requirements
- Self-service Data Analytics and Tools
In light of the change in federal administration, potential adjustments to the Affordable Care Act (ACA) could emerge, with a likely shift toward prioritizing Medicare Advantage plans over traditional Medicare. Additionally, with the expiration of the federal telehealth safe harbor, state-level action may be necessary to maintain telehealth access and coverage.
At the state level, we anticipate increased regulatory focus on commercial property and casualty coverage related to cybersecurity breaches. This follows a growing number of legal disputes in which insurers have denied claims worth millions of dollars, citing narrow policy definitions of terms like “loss” or “damages.” Moreover, several states are already moving to mandate coverage of weight-loss medications such as GLP-1 receptor agonists. Another area to watch is paid family and medical leave coverage, where ongoing state-level regulatory changes are expected. States are continuing to address the complexities of private or equivalent plans offered by insurers, aiming to balance consumer protection with market flexibility.
As these developments unfold, insurers will need to closely monitor regulatory changes across these key areas to ensure compliance and adapt to shifting expectations.
5. Continuing Prevalence of Omnibus Bills and Increasing Omnibus Rules
The use of omnibus bills—broad legislative proposals encompassing a wide range of topics—continues to rise in state legislatures. These bills are often employed to expedite the passage of complex or contentious legislation. However, their growing prevalence presents significant challenges for compliance teams in the insurance industry. The complexity, ambiguity, and extensive content of these bills increase the workload for teams responsible for identifying, interpreting, and implementing new regulatory requirements.
According to Moody’s Analytics, the proliferation of omnibus legislation not only raises compliance costs but may also impact regulatory capital at a time when the industry is under significant competitive pressure.
In addition to legislative omnibus bills, insurance departments have increasingly adopted the omnibus format for regulatory rulemaking, bundling numerous, often unrelated, rules into single comprehensive packages. This trend adds further strain to compliance efforts, escalating both costs and the time required to manage regulatory changes.
In 2024 alone, the 22 omnibus bills and rules enacted totaled 2,400 pages of legislation and regulations. Compliance teams invested approximately 350 staff hours in reviewing and analyzing these documents, ultimately resulting in 145 new compliance requirements spanning multiple lines of business.
As the use of omnibus formats continues to grow, insurers must prepare for ongoing increases in regulatory complexity, necessitating enhanced compliance processes and resource allocation.
6. Escalating Regulatory Activity
The growing volume of regulations, bulletins, and notices issued in 2024 underscores the insurance industry’s effort to address evolving challenges and shifting market conditions. Regulators are increasingly focused on protecting consumers, mitigating climate-related risks, and fostering innovation within the sector. As a result, industry stakeholders must remain vigilant and well-informed to ensure compliance with the continuous stream of new and updated requirements.
Even the issuance of regulatory notices—such as bulletins and circular letters—has seen a steady rise, now averaging 1,600 notices annually. Staying ahead of these developments is crucial for insurers and other market participants to effectively adapt to regulatory changes while maintaining high standards of service quality and consumer protection.
By proactively tracking and responding to regulatory updates, companies can not only meet compliance obligations but also enhance their ability to operate efficiently in an increasingly complex regulatory environment.
How RegEd Can Help
RegEd’s Regulatory Change Management is a workflow-enabled enterprise software solution that provides firms with everything they need to be aware of, comply with, and demonstrate compliance with all relevant regulatory changes. Comprised of more than 30 regulatory experts with over 300 years of combined knowledge and experience in the insurance and/or securities industries, RegEd’s Regulatory team delivers regulatory change analysis for new and amended rules that is easily digestible for compliance and business units.
The Regulatory Change Management offering helps firms manage regulatory change through the delivery of actionable content, in a closed-loop process, across the enterprise. This strengthens the firm’s compliance program, lowers compliance costs, and reduces non-compliance risk.
Schedule a consultation to learn how RegEd’s Regulatory Change Management solution helps compliance leaders:
- Free resources to focus on high-value work
- Improve relationships with business units
- Ensure Policies & Procedures are in line with regulatory requirements
- Achieve peace of mind knowing that regulatory changes are handled
