Insurance underwriters and brokers can help clients address the uncertainty posed by tariffs and other regulatory changes by educating them about the potential impacts. (Credit: Adobe Stock)
The winds of regulatory change blew into Washington, D.C. in 2025 as a new presidential administration brought with it the drive to reduce government intervention in favor deregulation and an emphasis on market-driven solutions.
What could this mean for insurance operations?
In the conversation that follows, Ray Ash, executive vice president and head of Financial Lines for Westfield Specialty, talks about what he believes insurers and insureds should keep in mind regarding the current regulatory environment in the U.S.
Question: What new regulatory or corporate governance developments are shaping exposures for financial lines businesses?
Ray Ash: On the regulatory front, the new presidential administration is generally instituting a lighter regulatory touch across multiple federal agencies. This includes a change in SEC leadership and staffing that, on a high level, has reduced headcount by about 17%, and has a stated goal of “becoming less burdensome by adding needless friction to the marketplace.”
The Department of Justice had a brief pause on Foreign Corrupt Practices Act enforcement, and the DOJ recently announced a new set of guidelines for the investigation and enforcement of FCPA, with a focus on cartels and transnational criminal organizations.
And on an individual level, the Federal Housing Finance Agency recently proposed the inclusion of bitcoin as eligible collateral when consumers are being considered for a mortgage.
While these changes are demonstrating the promised lighter regulatory touch, it creates greater risk exposures for financial lines carriers. This type of environment can create opportunities for aggressive or unscrupulous individuals to push agendas that harm consumers and/or investors. Those actions can then lead to private class action litigation which has an immediate impact on the insurance industry.
Regarding corporate governance, Nevada and Texas are increasingly competing for business’ incorporations in their states — away from the traditional home of incorporations in Delaware. Nevada and Texas are working to create more business-friendly environments, providing favorable tax treatments and additional corporate legal protections. Delaware has recently responded with changes of its own to remain competitive and keep companies incorporated there. We are watching this tug of war to see how it may impact potential preferential D&O pricing in these three states, as each state legislature provides escalating legal protections in an attempt to increase the governance protection ante and attract more companies to incorporate in their states (Nevada/Texas) or retain their state as the preferred state of incorporation (Delaware).
Q: What trends are you seeing in securities class action lawsuits that could signal new vulnerabilities for financial institutions?
Ash: The first half of the year has seen 110 securities class action suits filed, which keeps us on pace to equal last year’s 222. The year 2024 was the highest number of SCAs, since the spike of activity from 2016 through 2020.
The allegations vary widely but suits related to artificial intelligence and AI-washing are increasing along with cryptocurrency litigation, and we’re still seeing COVID-19-related litigation in 2025.
Interestingly, Special Purpose Acquisition Companies (SPACs) were popular in 2020 and 2021, and many SPACs failed to find business combinations or experienced challenging combinations that led to securities class action litigation. In 2025, there have already been 63 SPAC IPOs, which represent a disproportionate percentage of overall market IPOs: 65% overall. This is a concerning trend and could adversely impact insurers’ results.
Q: What impact has the current administration’s tariffs had on private equity (PE) firms and multinational companies? How are underwriters helping clients weather the uncertainty?
Ash: Companies, whether PE backed or multinational, are looking to manage the impact of tariffs to their margins and choose to either absorb these additional costs or pass all or part of them along to consumers.
For private equity-backed portfolio companies that typically use a high amount of debt to increase returns, tariffs pose a unique challenge. The leverage used in purchasing a company compresses margins for a period of time, making it harder to absorb the cost of tariffs. At the same time, it’s a tough decision to pass those costs along to consumers and risk losing sales, hurting the overall business. The resulting impact to a PE firm’s portfolio company’s financials could also make an exit much more challenging; for example, a sale to a strategic buyer or an initial public offering. The introduction of tariffs is arriving at a precarious time for the PE industry.
Underwriters and brokers are helping clients address this uncertainty by educating them about these potential impacts, and creating a dynamic insurance marketplace with competitive terms and conditions that can respond to myriad scenarios that include debt refinancings, bankruptcies, regulatory investigations and shareholder lawsuits.
Question: How has the rise of AI-washing claims impacted D&O risk exposures, and how are underwriters responding?
Ash: While artificial intelligence technology is relatively new, the concept of overstating a business’ capabilities related to a new technology is not. During the dot-com era’s rise and fall, companies were able to go public with little more than a business plan. Many of those companies failed and securities litigation ensued.
Fast forward to 2020-2022 during COVID when some companies were alleged to have overstated their ability to respond to the pandemic with novel products and services. Again, litigation ensued.
Now, with AI, the same story is playing out: Companies are asserting they have a superior technology or are more quickly adopting AI in their processes.When these companies achieve underwhelming results despite these claims, securities litigation often follows.
Underwriters are focused on executives’ references to companies’ AI capabilities and to better understand how aggressive their companies are working towards various AI solutions. As an industry, we’re better served by educating our clients about how the expectations they set with shareholders, and the potential inability to meet them, can lead to unnecessary and costly litigation.
Q: What should brokers look for in an insurer to help navigate this risk environment today?
Ash: Today’s challenges present unique risks, which require creative solutions. Brokers should look for a qualified, financially stable insurer with underwriters who are well-versed in the complexities and nuances of the D&O marketplace. It is also critically important to have an experienced in-house claims team that is willing and able to educate brokers and ultimately their clients about unique claims experiences, to gain insights into ways to improve their corporate processes and governance to help mitigate potential risk.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.