As we progress through 2025, the insurance regulatory landscape continues to evolve on both sides of the Atlantic. With emerging technologies, changing consumer expectations, and lessons learned from recent market dynamics, UK and US regulators are implementing significant changes that will impact how insurers and brokers conduct business.
Cross-border regulatory convergence
The UK's Financial Conduct Authority (FCA) and the US National Association of Insurance Commissioners (NAIC) have strengthened their collaborative framework, resulting in increasing regulatory alignment. According to the International Association of Insurance Supervisors' 2024 report, new insurance regulations now show significant cross-jurisdictional harmonisation through the adoption of Insurance Capital Standards (ICS), creating both challenges and opportunities for firms operating in both markets (IAIS: 2023 – 2024 roadmap).
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Data privacy and protection
UK: Consumer duty and data protection evolution
The FCA's Consumer Duty requirements, implemented in 2024, continue to expand in scope for 2025. There is increasing scrutiny from the FCA for insurers to enhance transparency of their services by sharing more data, namely, to demonstrate fair value for their products. This is not just about repackaging existing data, insurers must develop new metrics to better understand customer outcomes.
Insurance firms must demonstrate:
Clear data usage transparency in all customer communications
Proactive identification of vulnerable customers in data processes
Regular assessment of customer outcomes related to data handling
Robust third-party oversight when sharing consumer data
The UK's post-Brexit data protection framework is also evolving, with the Data Reform Bill introducing new requirements for algorithmic transparency while attempting to reduce compliance burdens.
US: NAIC Insurance data security model law
The NAIC data security model is now being adopted across multiple states. US insurance companies must now provide more transparent data collection notices, implement stronger data security protocols, and offer consumers greater control over their personal information. Non-compliance penalties have increased significantly, with potential fines reaching up to $500,000 for serious violations in states like California and New York.
Climate risk regulations
UK: Climate disclosure integration
The UK has positioned itself as a leader in climate-related financial disclosures, with mandatory Task Force on Climate-related Financial Disclosures (TCFD) reporting now integrated into regulatory frameworks for certain large institutions. According to the Bank of England's latest climate risk survey, more UK insurers have incorporated climate scenarios into their risk management frameworks, although there are still challenges with climate data quality (Bank of England: Climate related financial disclosure 2024).
New requirements mean businesses must focus on:
Granular reporting of investment portfolio alignment with net-zero targets
Enhanced disclosure of physical risk exposure in underwriting portfolios
Transition planning documentation with concrete milestones
Climate stress testing with standardised scenarios
US: Expanding state-level climate initiatives
In the US, climate risk oversight continues to develop primarily at the state level. Research shows that more and more insurers anticipate increased regulatory scrutiny of their climate risk exposure and mitigation strategies.
Property and casualty insurers in particular face new requirements to:
Disclose potential financial impacts of climate-related risks
Detail how climate considerations are integrated into underwriting processes
Demonstrate adequate capital reserves for increasing natural catastrophe events
Report on investment portfolio exposure to carbon-intensive industries
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Algorithmic accountability standards
As artificial intelligence and complex algorithms become more prevalent across insurance operations, regulators have responded with new algorithmic accountability standards. Since 2019, the Bank of England has tracked machine learning adoption across financial services in the UK, finding its most extensive implementation in banking and insurance, primarily for anti-money laundering, fraud detection, customer service, and marketing applications. The FCA have previously investigated cases of direct discrimination in the sector on the basis of protected characteristics under the Equality Act 2010.
The FCA and PRA's joint discussion paper on AI expressed concern that AI-driven personalisation could exclude certain groups from accessing financial products, potentially constituting unlawful discrimination. In a 2024 update the FCA reiterated that “firms using AI technologies in a way that embeds or amplifies bias, leading to worse outcomes for some groups of consumers, might not be acting in good faith for their consumers, unless differences in outcome can be justified objectively” (FCA: A literature review on bias in supervised machine learning).
UK insurers must now:
Document all algorithmic decision-making processes
Conduct regular fairness assessments across protected characteristics
Maintain human oversight of AI systems
Provide clear explanations for algorithmically-derived decisions
Cyber insurance evolution
UK: Operational resilience and cyber standards
The UK's operational resilience framework now incorporates specific cyber insurance standards following guidance from the Prudential Regulation Authority (PRA). The Association of British Insurers reports that UK cyber insurance premiums grew by over 25% in 2024, with increasing scrutiny on policy terms and conditions (Oxera Consulting LLP: The value of cyber insurance to the UK economy).
New requirements include:
Clearly defined important business services related to cyber coverage
Impact tolerance setting and testing for cyber disruption scenarios
Mandatory inclusion of specific cyber coverage definitions
Regular reporting on cyber exposure accumulation
US: State-level cyber insurance reforms
With cyber losses continuing to mount in the US (a 34% increase in 2024 according to the latest Cyber Insurance Market Report), state regulators are implementing more stringent requirements for carriers offering cyber coverage.
New cyber insurance standards include:
Minimum security requirements that policyholders must meet for coverage eligibility
Enhanced policy wording clarity around coverage triggers and exclusions
Mandatory notification processes for cyber incidents
Required disclosure of aggregated cyber exposure across an insurer's portfolio
Emerging regulatory initiatives
Several regulatory initiatives continue to develop across the UK and US markets, undoubtedly impacting insurers and brokers.
Parametric insurance frameworks
Regulators in both markets are developing standardised frameworks for parametric insurance products, which pay predetermined amounts based on trigger events rather than actual losses. With parametric solutions rapidly growing, clear regulatory guidelines will be essential.
On-demand insurance oversight
The growing popularity of on-demand and micro-duration insurance products has prompted regulators to evaluate existing frameworks for these emerging coverage types. According to research and industry data, the on-demand economy is expected to reach a valuation of approximately US$335 billion in 2025, with on-demand insurance products growing by two fifths, particularly in the gig economy.
Blockchain-based insurance products
As blockchain technology enables new insurance distribution models and smart contract-based claims processes, regulators in both the UK and US are developing frameworks to govern these innovations.
As the regulatory landscape responds to technological innovation, changing risk profiles and consumer protection concerns it’s never been more important for insurers and brokers to think ahead and adapt. Those who view regulatory evolution not as an obstacle but as a catalyst for positive transformation will differentiate themselves in a saturated market.
If you’re looking to hire new specialist insurance talent or are considering a new career opportunity don’t hesitate to contact our insurance recruitment consultants.
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