Over the past 12 months, significant shifts take place across the insurance industry: Agent expectations are being redefined, advanced technologies are reworking operations, and major players are reevaluating their strategic approach to optimize for the new landscape taking shape.
Recently, Vertafore hosted its annual Running Start webinar with SILA, during which a panel of insurance experts reflected on the 2025 year and discussed compliance and distribution trends anticipated in 2026. We’re recapping the main takeaways here.
Regulatory change remains constant and significant
The regulatory side of the insurance industry continued full speed ahead in 2025 with a grand total of 757 changes tracked across the United States. That pace is not expected to slow in 2026. In fact, additional updates are expected, including changes to the NAIC Uniform Application for individuals and businesses, which help to streamline licensing processes across the U.S., and expanded electronic submission requirements in certain states.
Beyond the volume, regulatory focus is growing broader in scope as well. Increased scrutiny around consumer protection, data governance, AI, and cybersecurity reflects more extensive oversight across securities and insurance lines. For carriers seeking to reduce compliance risk proactive compliance monitoring and streamlined licensing workflows will help them stay efficient and flexible as changes come their way.
Surplus lines continue to grow
Market conditions in 2025 resulted in more business flowing into excess and surplus lines, a trend that should remain in 2026. As carriers leave certain regions due to state rate increase limitations and continued natural catastrophes, distribution strategies are being reevaluated. At the same time, new adjuster licenses dropped by 16% in 2025 and are expected to continue declining in 2026, adding another layer of complexity across the industry. Carriers will need to maintain strong visibility into licensing, appointments, and compliance in order to navigate market shifts and workforce challenges.
The P&C market is softening—but outlook is mixed
During the webinar, Tim Owen, VP of Product Management at Vertafore and former president of SILA, highlighted that lower inflation and moderate rate increases may contribute to a softening property and casualty market. However, if natural disasters persist at a similar pace and level of impact, rates could remain high.
Lower inflation, lower rates—that’s good. The counter to that is if we have high catastrophe levels; that could keep the rates higher.”
- Tim Owen, VP of Product Management, Vertafore
On the distribution side, M&A activity is expected to flatten out in 2026 compared to 2025, especially if interest rates hold steady. That’s not to say that deals won’t happen, but they’ll likely be fewer and far between.
AI governance is catching up to adoption
Artificial intelligence has become a focal point for carriers looking to optimize their internal operations. The use of AI tools is expanding across underwriting, claims, and distribution monitoring, with goals of improved efficiency and time saved to show for it. As AI applications expand, carriers are seeking ways to bolster their returns on this new age of technology.
At the same time, oversight of AI use is intensifying. The NAIC’s AI Bulletin reinforces state regulatory authority and emphasizes governance frameworks and guardrails. At the federal level, discussions are signaling potential conflicts between national AI regulation and state-based oversight. Altogether, carriers in 2026 will need to balance innovation with transparency and strong adherence to emerging regulations.
Compensation and technology are a key match
Everyone knows that compensation is important, but the past year has seen it emerge as a key differentiator for carriers hoping to win business. In two 2025 reports, one surveying life insurance agents and the other health insurance agents, Vertafore discovered that compensation had significant influence over where agents place their business, and not just in the dollar amounts.
Payment flexibility, contests and incentives, and a comprehensive platform are just a few of the factors that influence agent behavior. For carriers, investing in compensation doesn’t just mean throwing more money at the agents; it means implementing the technology and features that meet agent expectations and improve payment processes.
Integrated digital platforms are replacing fragmented systems
Cloud and API connectivity, once viewed as key elements of carrier infrastructure, have become table stakes. The competitive edge in 2026 lies in integration, in connecting onboarding, management, compliance, compensation, and reporting into a unified distribution system.
Leading carriers are investing in end-to-end, integrated digital platforms that help streamline administration, sharpen compliance, and provide a more compelling and real-time agent experience. On that last point, real-time capability is becoming an essential factor for numerous elements of the insurance lifecycle; compliance, licensing, and compensation management are shifting from batch processes to real-time visibility. The reasoning is clear: Fragmented technology stacks create friction and delays, while integrated systems enable governance and growth at scale.
Resilience amid uncertainty
Our 2026 Running Start webinar underlined key changes in the insurance landscape, including market shifts, regulatory intensity, AI acceleration, and the evolution of distribution technology.
While a degree of caution is warranted for carriers going into 2026, the future is bright and there are reasons to be optimistic.
Carriers who prioritize flexibility and preparedness with compliance, who invest in integrated platforms and strategic management tools, and who dedicate resources and support to their agency partners, will be best positioned to navigate 2026 with confidence.
For a full breakdown and discussion of market opportunities and risks, the importance of real-time data and analytics, the influence of compensation on agent behavior, the regulatory implications of AI adoption, and what carriers are leveraging in order to get ahead, watch the on-demand version of Running Start today.