Strategies for navigating regulatory changes in a digital landscape

It's safe to say that the insurance business is in a period of flux. Artificial intelligence, interconnected devices, climate change, new cybersecurity threats and more are not only changing how providers offer their services, but also the constraints controlling how these companies can operate.

Regulation will play a major role. As insurance technology — and, as a result, the industry as a whole — transforms exponentially, state, federal and local governments will likely roll out a slew of regulatory changes as they attempt to keep pace.

Even more than in previous years, it will be critical for providers to monitor new regulations closely. What's more, the companies that quickly respond to these changes will be rewarded with a massive leg-up on the competition.

4 Strategies for navigating regulatory changes

1. Adopt an 'organic' mindset

Consider this fact: In the first half of 2023 alone, there were 1,700 changes to state insurance regulations — up 8% from the same time period a year prior.

There are two troubling takeaways in this statistic which don't even include changes happening at the federal level.

For one, it shows just how many new regulations insurers must navigate in a given year. Secondly, it shows how the rate of those new regulations is seemingly gaining steam as countless new factors influence our industry.

This is why providers must embrace flexibility above all. Changes are coming — and they'll keep coming whether we like it or not. The businesses that succeed will be those that prioritize adaptation and resilience over doing things how they've always been done.

For inspiration, look at the success of companies that have navigated similarly tumultuous times. After the financial crisis of the late 2000s hit southern Europe, Greek insurer Interamerican worked to remodel itself.

The company sought to be "less mechanical and more organic." A goal it achieved with less hierarchy, autonomous teams and operational transparency that allowed employees to work with more agility and make changes from the bottom up.

2. Shift to the left

It's one thing to stay aware of regulations as they come, but it's another to incorporate them seamlessly into your workflow from start to finish.

This is the theory proposed by shift-left compliance, or staying "to the left" of the regulatory process. The idea here is: As opposed to keeping compliance to the "right" of decision-making — meaning, an afterthought you only consider once policies are at the finish line — your company can benefit massively by shifting that thinking to the left.

This means integrating regulatory compliance into every part of your business model, starting with ideation. When considering a new policy or practice, you can benefit greatly from first asking whether the idea interferes with any future regulatory changes, or whether it instead works with those changes seamlessly.

The result is less wasted time, less wasted money and an increased peace of mind that you're operating within existing legal constraints.

3. Communicate the benefits

Suffice it to say, there are numerous benefits to embracing regulatory changes as they come, especially when those changes are in line with customer expectations.

Take cybersecurity as an example. It's bound to be an area of high interest for state and federal regulators in the coming years, as changes in AI, the Internet of Things and predictive analytics require us to consider data in new ways.

The good news, though, is that this is an area where regulators and customers seem to be aligned. A survey published in 2024 from Nationwide found that 80% of consumers are worried about identity theft, while a survey from the Intellectual Property Center shows that 94% of people said they would not buy from a business that failed to protect their privacy.

Or consider climate change, which was the subject of numerous regulations in 2024. The increase in rules and requirements reflects a recent shift in customer preferences, with over 50% of consumers globally now saying that insurance companies should have a role in combating climate change.

It's one thing for executives and leaders to understand these benefits, but it's another thing to communicate them clearly to your employees. By helping the entire company understand why these regulations are actually in lockstep with good business practices and company-wide goals, it's much easier to get the buy-in required to stay flexible and change workflows on the fly.

4. Train smarter, not harder

Of course, all the above means very little if you can't get it to stick. That's where training comes in. Granted, this part of the process can become arduous, tricky or downright impossible as ever-evolving regulations come down the pipeline.

For many providers, it's logistically impossible to conduct new training on every regulatory change that affects your business. Instead, "microlearning" can offer an alternative.

While microlearning was a bit of a buzzword in years past, that doesn't detract from its effectiveness. The system — which basically involves learning information in short, 20-minute intervals, as opposed to during longer-but-less-frequent sessions — has been proven to work wonders for retention, efficiency and employee confidence.

In fact, one review of 17 different studies across various industries and fields found that microlearning helped people retain the knowledge they consumed. Plus, creating short-form training materials is typically faster and more cost-effective than designing longer ones.

This is also where providers can lean on the very technologies that are speeding up regulation. AI learning models can help study, analyze and summarize the information that employees need to know. It's a full-circle embrace that turns a challenge into a solution. Combined with the ideas above, this can lead to a big win for companies navigating a complicated era.