Insurance trends and regulatory changes to watch in 2025

The insurance industry is evolving faster than ever in response to turnover in the workforce, ongoing regulatory shifts, and rapid technological advancements. These themes were explored in depth during the 2025 Running Start webinar, an annual conversation featuring Vertafore and SILA experts, which provided practical guidance for managing compliance while maximizing advantages amid ever-changing conditions.

Below are some of the key takeaways from the discussion. 

The insurance workforce is changing

Among the most notable developments is the changing of the guard that is already taking place in the insurance workforce. The U.S. Bureau of Labor and Statistics estimates that 400,000 insurance professionals plan to leave the industry by the end of 2026, with half of the workforce expected to retire within the next decade. As a result, carriers are increasingly focusing on efforts to attract and retain new talent while institutional knowledge can still be passed on or digitized into new systems and processes.

Producer expectations are changing, too

To successfully navigate this turnover, carriers are paying greater attention to efficiency in onboarding for young professionals, including helpful digital and person-to-person resources such as training programs and mentorship opportunities. Unsurprisingly, many of the newest entrants into the insurance industry expect digital-first solutions for licensing and compensation management—and especially for their compensation statements. Agents want more streamlined compliance and onboarding processes, with 77% of professionals in a recent survey reporting that it’s critically important for carriers to invest further in these areas.

P&C markets might soften if inflation ticks down

The property and casualty (P&C) market, which has hardened over recent years due to inflation and supply chain disruptions, is finally showing small signs of softening. If inflation remains lower, that softening could continue; alternatively, another surge in catastrophes could drive more business in surplus lines and keep rates higher. Whether states approve rate increases (which seems unlikely) will play a crucial role in determining price stability or pressing more carriers to exit riskier markets.

Other noteworthy market trends:

• Surplus lines expansion – With insurers exiting high-risk markets, surplus lines licensing has surged, though renewals dipped slightly in 2024 (down four percent), presumably due to high licensing costs.
• Mergers and acquisitions – The industry witnessed over 750 agent and broker acquisitions in 2024, continuing a trend of consolidation, but one that is somewhat lower than in 2023 and 2022.
• Multichannel distribution – Carriers are increasingly adopting hybrid distribution models, integrating direct, independent, and captive sales channels.
• Annuity sales growth – High interest rates have driven record annuity sales, particularly in the fixed and indexed market segments.

More regulatory changes, but fewer problems

Last year, Vertafore implemented 727 regulatory changes into Sircon product updates, the highest volume in a single year. That trend is likely to continue as states are increasingly embracing digital transformation, moving away from paper-based processes to streamline licensing and compliance in ways that are up to date and in sync with modern insurance codes.

Main regulatory updates to know about:

• Pre-licensing education changes – Multiple states, including Tennessee, Maryland, and Pennsylvania, have removed pre-licensing education requirements, citing cost and retention concerns.
• Continuing education requirements – 23 states now require 12 hours of Investment Advisor Representative Continuing Education (IAR CE), including five new states or territories—Minnesota, Nebraska, New Jersey, and the U.S. Virgin Islands—effective as of Jan. 1, 2025.
• Cybersecurity and data privacy – New York, historically at the forefront of cybersecurity, is requiring multi-factor authentication (MFA) for sensitive data access by November 2025, which signals heightened security expectations for covered entities. Covered entities are required to have a license, registration, permit, or accreditation.
• Electronic services expansion – More states, including New York and Washington, are allowing third-party technology partners to handle licensing services. Rhode Island, too, has implemented electronic appointments and terminations for the first time.

Keep an eye on AI and crypto; don’t sleep on IDM

It’s beginning to do more than just dominate the headlines: In 2025 artificial intelligence (AI) will continue to make inroads in the insurance industry, particularly in productivity, automation, and compliance management. However, regulators are scrutinizing AI usage to ensure fairness and prevent bias. Crypto, too, is worth watching, especially as more consumers seek out insurance coverage for their blockchain assets, which for carriers means exploring new distribution products and, most likely, incorporating additional producer licensing and education requirements.

Until AI and crypto are the norm, though, it’s probably more important for the industry to pay attention to technological developments in automation, particularly for the areas of licensing and compliance. Already carriers are moving toward single-system platforms to manage agent onboarding, licensing, and compensation more efficiently. Like AI and crypto, integrated distribution management (IDM) is the future, but it’s here today.

2025 is here: What carriers do next matters.

As the industry navigates workforce transitions, changing regulations, and breakthrough technologies, competitive carriers should prioritize efficiency, digital transformation, and effective compliance operations.

For insurance professionals looking to stay ahead, engaging with organizations like SILA and leveraging technology-driven compliance solutions are two ways to gain lasting advantages in a dynamic market. For more information and to learn other ways to get involved, watch the 2025 Running Start panel discussion in its entirety.