Wednesday, October 05, 2011


Regulations can sometimes be good for business...

In the media, you will frequently hear the rally cry from Republicans on making government smaller and the need for less regulations. While I generally agree with their position, I think it is vital that the American public equally understand when more regulations are also beneficial...

I have spent a majority of my career in the US-based Insurance sector which is probably one of the most regulated businesses on the planet. Unlike other verticals in the financial services sector, the various fifty states do actively participate in creating unique one-off regulations that have no commonality to their peers. This means that an insurance carrier whenever it wants to roll out changes, may need to account for the same theme to be applied to their IT systems with deviations in approach and of course being rolled out at different dates. In other words, insurance carrier IT systems are much more complicated than they need to.

Complexity in this way is sometimes problematic in that it takes a lot of energy to do a little bit of work. Insurance IT employees are sometimes viewed as whiners by their peers in banking and capital markets. The simple fact though is that it is so difficult to roll out software in a compliant fashion is actually a business benefit.

Consider the scenario of if there were only one Federal regulator instead of fifty unique and distinct state-by-state regulators, it would actually make it easier for European insurance carriers to come to the United States, appeal to Obama to simplify laws via hiring a sole lobbyist organization and to then move jobs outside of the United States. With the complexity of state-by-state regulation, this makes it more challenging for a European insurer to make an investment to understand what it would take to enter the US insurance market...

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