Increased Regulation in the Insurance Industry Due to Non-Compliance
A new report reveals that the insurance industry has seen more regulatory and legislative activity in 2009 than it has in both 2007 and 2008.
The Wolters Kluwer Financial Services Insurance Compliance Solutions conducted the survey after noticing an increase in the insurance industry’s regulatory activity. In just six months, over 10 000 pieces of legislation with factors effecting the insurance industry have been introduced in U.S. Senate. This is almost a 70% increase since the same six-month period in 2008 and a 50% increase since 2007.
Senior compliance counsel at Wolters Kluwer, Kathy Donovan states that 2009’s increased activity illustrates that staying on top of legislative and regulatory activity is a challenge that’s growing. This has also caused the firm to estimate that over 26 000 state and federal laws effecting the insurance industry will be created or modified next year.
Insurance providers have also seen increased activity in financial departments, as the global recession has caused them to function under tighter budgets and financial restrictions. However, this creates complications when trying to manage regulatory activity, which still remains highly manual in the insurance industry.
To deal with the current increases and next year’s projected upsurge, Wolters Kluwer suggests that insurers explore new ways to reduce all costs associated with non-compliance. While these costs include direct items such as exams and non-compliance fines, and they can also involve hidden costs, such as future loss of business.