Pace of regulatory changes reshapes risk for insurers, expert says

The volume and speed of regulatory changes under the Trump administration is keeping insurers on their toes and reshaping what risk management looks like in 2025, according to one industry expert.

“Overall, I would say both the speed and volume of regulatory changes is greatly impacting the industry… Not only do insurers have to understand the impact directly to the company itself, but they also have to understand the impact to the sectors that they insure,” Peter Dugas, executive director, Capco, and managing director of the company’s Center of Regulatory Intelligence, said.

As an example, Dugas pointed to the May 12 executive order directing U.S. pharmaceutical companies to lower drug prices. As a result, he said, health insurers have to rethink the way they price, underwrite or effectively deliver certain health insurance products.

“They’re having to respond to not only the president’s actions itself and the impact to the insurer, but then also to the actual sector that is either providing a product or services or delivering something to the consumer,” Dugas said.

High frequency of regulatory changes

President Donald Trump issued over 140 executive orders in his first 100 days in office during this term, a historically high amount. That number now stands at 152, and a series of tariffs have also been introduced that have impacted insurance claim costs.

Dugas noted this frequency of regulatory changes dramatically differs from previous administrations, including Trump’s previous administration.

“While there were a lot of activities that were taking place regarding laws or regulations or modifications to policies, this is really happening on a daily basis or even an hourly basis. That is something that really has changed, so the ability for insurance companies to be responsive to that speed and that volume of change is particularly important,” Dugas said.

Increased monitoring needed

According to Dugas, the frequent regulatory changes mean insurers must now keep their eyes on not only the Department of Insurance but also:

• Departments of commerce, transportation and state
• U.S. Trade Representative Office
• The Office of the Governor
• State attorney generals
• State legislatures — especially those opposing the president’s stance on areas such as climate change, ESG or DEI
• Any number of agencies that are either implementing, withdrawing or amending rules and regulations that directly impact insurers and the industries they insure

“Because of the speed at which the president and his agenda is moving, it’s causing a challenge for financial institutions because not only are they having to monitor the traditional areas that they would monitor for, whether it’s tax or trade, they’re also having to increase the scope of coverage at the state level,” Dugas noted.

He said this is necessary to “assess potential direct impacts to either the cost of insurance, the underwriting of insurance or the approach they take to products or services they deliver in the marketplace.”

Geopolitical risks becoming standard

Dugas suggested the global impact of President Trump’s regulatory changes and tariffs mean geopolitical risks are increasingly becoming table stakes for U.S. insurers.

“Geopolitical risk management is now becoming just an imperative. Most companies don’t have the luxury of avoiding the overall risk to their industry by the actions taken either by the Trump administration or by foreign governments in response to actions taken by the Trump administration,” he said.

For instance, retaliatory tariffs or other retaliatory actions could cause supply chain challenges or introduce foreign labor restrictions or export controls. Dugas stressed that insurers must understand these new risks and how they could impact the products or services they offer.

“We’re starting to hear more insurance companies starting to formalize their geopolitical risk management program in order to better integrate intelligence into the process so they can either assess emerging risk, real-time risk or just overall risk to the sectors that they are underwriting or covering. Because of that, they’re having to look at things like de-risking,” he said.

Liquidity concerns

Additionally, Dugas said real-time assessment of the potential impact regulations and tariffs have on cost is creating new liquidity challenges for insurers.

“When it comes to liquidity overall, I think most insurance companies — and most industries, not just insurance companies, in general — were really caught off guard by the broad applicability of the tariffs. So, trying to be able to build out models that would allow for an insurance company to understand real-time variability and the pricing of those models could potentially cause liquidity challenges that they will then need to have to price in and respond to,” he said.

He noted that insurers not only need real-time assessment of expected impact on cost, but also need to understand potential tax implications that could result from states trying to respond to federal changes.

“There’s also areas related directly to policy. So, it could be everything from how the states are having to respond to things like artificial intelligence and how they associate the risk with products or services delivered to the marketplace,” Dugas said.

Capco, a Wipro company founded in 1998 and based in London, UK, is a technology and management consultancy firm that specializes in the financial services industry. It has more than 1,500 consultants across over 30 offices around the world.

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