State Advocacy and Regulatory Trends to Watch in 2026 for U.S. Insurance

In 2026, state-level policy advocacy is expected to intensify in response to financial pressures and regulatory shifts. Unlike the federal government, states must balance their budgets annually, making them sensitive to changes in federal financial support. The recent implementation of federal tax legislation, including H.R. 1, creates a significant financial impact on state budgets, leading to potential tax debates to fill revenue gaps. One notable area of state regulatory focus is independent contractor classification, as seen in New Jersey's proposal that could redefine insurance professionals' employment status. Opposition to this proposal generated substantial feedback, and legislative efforts to exempt insurance professionals are underway but likely to extend into 2026. Similar regulatory proposals could emerge in other states. Long-term care insurance remains a critical topic across various states. Washington state voters recently rejected making the Washington Cares program optional and approved allowing investment in the stock market, with benefits commencing in 2026. Massachusetts proposed new legislative measures to explore statewide long-term care, including a tax credit for premiums paid. These efforts reflect ongoing responses to anticipated declines in Medicaid funding slated for the end of 2026. New York exemplifies efforts to reduce regulatory burdens impacting consumer access to life insurance advice. Legislation aims to clarify suitability requirements for term life insurance policies to prevent overly burdensome applications. Regulatory updates in New York have begun to address compliance complexities, although leadership changes in the Department of Financial Services may influence future industry regulations. The 2026 election cycle is poised to have significant implications, with most state legislative seats and numerous gubernatorial positions up for election. These electoral outcomes will shape state policy directions, including potential tax legislation adjustments. Budgetary and tax discussions are often accelerated during legislative sessions, underscoring the need for insurance professionals to engage proactively through industry associations like Finseca that offer timely alerts and advocacy support. Overall, 2026 is anticipated to be a pivotal year for state insurance regulation and fiscal policy, with broad effects on compliance, taxation, and long-term care insurance markets. Staying informed and engaged at the state level is crucial for insurance providers and professionals navigating this evolving landscape.