State insurance regulations are changing faster than they did before the COVID-19 pandemic, though it may be hard to tell.
While a flood of pandemic-related state regulations (laws, administrative rules, bulletins and notices) pushed the numbers of insurance regulations to a record 3,600 in 2020, this year’s regulatory activity has proven to be just as busy as the previous record-breaking year, 2019. Many of this year’s insurance changes have been included in omnibus bills, some of which have reached an unprecedented 2,500 pages, rather than being introduced as stand-alone bills.
“This legislative season has been busy because last season got delayed. Regulators are playing catch up,” said Merlinda Johnson, Director of Insurance Regulatory Compliance for RegEd. “It’s not just straight insurance legislation either. States are putting insurance regulations into bills with a bunch of other changes to get everything passed.”
RegEd’s Regulatory Affairs team has vetted more than 40,000 pieces of legislation in 2021, looking for even the most subtle insurance-related changes. “It’s not uncommon to go through something in detail and find there’s nothing actionable for insurance companies,” Johnson said.
A 1,200-page bill may have one paragraph pertaining to insurance regulations, for example. Of the changes that RegEd regulatory analysts have found, many reflect the increasing complexity of state insurance regulations. Regulators are addressing issues like cybersecurity, diversity, equity and inclusion (DEI), artificial intelligence (AI), and environmental, social, governance (ESG) matters.
ESG issues are at the forefront, Deloitte found in surveying 100 chief financial officers and senior finance executives at US insurers in May. “The ‘E’ of ESG should be a particularly hot topic in the second half of 2021, with two-thirds of respondents taking additional steps to address and disclose climate risks, while about half are reconsidering their investment strategy and portfolio to better reflect climate risk concerns and goals. More carriers are also appointing chief sustainability officers or their equivalent to at least orchestrate ESG initiatives and reporting, while many are taking steps to reduce their own carbon footprint,” Deloitte wrote in its midyear 2021 US insurance outlook.
Though regulators will make fewer changes in the coming months as the state legislative season winds down, with most legislatures finishing business by the end of September, insurers will be busy identifying relevant changes that have been made and implementing the necessary responses.
RegEd’s Regulatory Affairs team has already notified clients if they have been affected by any of the 1,749 changes in state insurance regulations from the first half of 2021. Comprised of more than 30 regulatory experts with over 300 years of combined knowledge and experience in the insurance and/or securities industries, the team provides insurance companies with clear and concise regulatory summaries. Reportable events can then be curated within RegEd’s Regulatory Change Management solution and auto-assigned based on a firm’s specific requirements.
Regulatory Change Management helps firms manage regulatory change through the delivery of actionable content, in a closed-loop process, across the enterprise. This strengthens the firm’s compliance program, lowers compliance costs, and reduces non-compliance risk.
- Free resources to focus on high-value work;
- Improve relationships with business units; and
- Achieve peace of mind knowing that regulatory changes are handled.
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