Insurance regulatory updates, market challenges, & AI innovations

The insurance industry remains in a state of transformation, adapting to regulatory shifts, changing market dynamics, and advancements in automation technology. Notably, this year brought legal challenges to proposed regulation for annuities, a growing focus on commissions integrations, and, to better support the industry’s compliance professionals in navigating these changes, a new leader for the Securities and Exchange Commission (SILA).

At the recent SILA 2024 National Education Conference in San Diego, all these topics and more were up for discussion. From routine licensing updates to the integration of artificial intelligence (AI), the 2024 SILA conference offered fresh guidance for managing and implementing new requirements.

Regulation roundup: 1033 waivers, continuing education, and more

Updates from regulators shared during the conference show increasing efforts toward modernization, but the degree of that progress largely depends on jurisdiction. Focusing on securities at the federal level, FINRA’s adoption of remote inspections for supervisory residential locations reflects the reality of an increasingly remote workforce. Meanwhile, many states are rolling out new, more efficient licensing tools, or (like Alabama and D.C.) eliminating requirements around pre-licensing education.

Inconsistencies in state requirements are an important compliance topic for many carriers. Licensing standards, 1033 waiver processes, and continuing education (CE) requirements vary widely, which greatly increases the complexity around credentialing. As an example of these challenges and efforts to improve them, Louisiana has shortened its 1033 waiver process from a process of months to a process of days—but other states face substantial delays in reviewing 1033 applications, with unique processes for their consideration.

1033 waivers, explained:

A 1033 waiver is authorization granted to individuals who have been convicted of felony offenses involving dishonesty, breach of trust, or insurance crimes—an authorization that allows them to work in the insurance industry despite their criminal record. This waiver is named after Section 1033 of Title 18 of the United States Code, which prohibits individuals with certain felony convictions from engaging in the business of insurance unless they receive written consent from an insurance regulatory authority.

This lack of uniformity across states is a persistent challenge for carriers and producers that operate across wider regions.

Other state-specific insurance regulatory updates and clarifications:

Alabama: Pre-licensing education requirement removed as of Jan. 1, 2024. As of Oct. 1, 2024, resident surplus lines licensees must provide proof of bond at license renewal. As of Jan. 1, 2025, non-resident surplus lines licensees must provide proof of bond at application and renewal. Stated they do not require a letter of clearance when applying as a resident.

Alaska: Effective Jan. 1, 2025, the Pharmacy Benefit Manager (PBM) license will be separate from the Third-Party Administrator (TPA) license.

Arizona: NIPR name change service is available. Requires a letter of clearance if the license does not show correctly on the National Producer Database (PDB) at the time they apply for their resident license in Arizona. No 2025 legislative changes are expected.

D.C.: Opened name change service on NIPR; pre-licensing education requirement removed from statute.

Delaware: Name change service coming soon.

Idaho: Requires a letter of clearance if the license does not show as inactive on the PDB at the time they apply for their resident license in Idaho.

Illinois: Only accepting electronic insurance licensing transactions. In 2026, will go to state-based health insurance marketplace.

Louisiana: Annuity best interest standards implemented, and every regulated entity must provide a regulatory and complaint email address. Business email addresses will be used for licensees; state will notify licensees electronically for regulatory actions, license revocations and suspensions, and fines. 1033 waiver process now coincides with the application process, which reduces processing time from six months to six days.
Maine: Business entity insurance license electronic change request service is active, but the electronic service for individual insurance licensing name changes is delayed.
Missouri: Annuity best interest implemented on Aug. 30, 2024.
North Carolina: Property & Casualty (P&C) or Personal Lines (PL) producers can also hold adjuster licenses. NIPR name change service is now available.

North Dakota: Paperless as of Nov. 1, 2024.

Oklahoma: Opened name change service on NIPR.

Ohio: Building a new pre-licensing education provider portal.

Rhode Island: Implemented CE for adjusters effective for 2026 license renewals.

South Carolina: NIPR name change services now available. In 2025, possible legislative change to require adjusters to get fingerprinted and complete CE.

Market challenges: Improving compliance and agency-carrier connectivity

Effective communication between agencies and carriers remains a pressing issue, particularly around appointing, where many compliance issues originate. From unclear processes for agent onboarding and terminations to inconsistent updates on appointment renewals, gaps in agency-carrier connectivity can lead to worsening inefficiency.

Several carriers have adopted robotic process automation (RPA) to streamline onboarding and termination processes. As an example of where this technology can be beneficial, frequent background checks—a key compliance practice—are still not consistent across the industry; many carriers run background checks only when there is a new appointment. It’s an oversight easily solved with compliance automation technology, otherwise these lapses can leave carriers vulnerable to penalties and fees in the event of a market conduct exam.

AI and the technology shaping the future of insurance

Among those attending SILA, one major takeaway is that artificial intelligence is no longer optional; it may quickly become an essential component in many professional services industries, including insurance. Already, AI is revolutionizing underwriting, claims processing, and even marketing by offering:

Enhanced fraud detection through pattern recognition;

Precision underwriting for underserved markets, enabling micro-insurance products tailored for greater affordability; and,

Operational efficiency through real-time updates and faster processing that improve customer experiences.

But AI integration in insurance also presents challenges. For carriers, bias in machine learning models could lead to unintentional discrimination, increased regulatory scrutiny, and reputational harm. As carriers investigate these technologies, they must ensure ethical oversight and strict governance to mitigate risks.

What insurance carriers should consider in the year ahead

The SILA 2024 National Education Conference generated interesting observations, particularly around licensing compliance and AI adoption. It is likely that 2025 will bring rapid advancements in the adoption of this technology, as well as another list of state regulations to be factored into carriers’ workflows.

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