Legislative and regulatory activity affecting the insurance industry has increased considerably in 2009 compared to the previous two years, according to a new report.
From January to July 2009, more than 10,000 pieces of legislation with potential effects on the insurance industry had been introduced throughout the U.S. This is more than a 70 percent increase over the same period in 2008, and nearly a 50 percent increase over the same period in 2007, according to the research by Wolters Kluwer Financial Services’ Insurance Compliance Solutions, a Waltham, Mass.-based compliance firm for financial institutions.
The recent study analyzed state and federal laws and regulations that pertain directly or indirectly to the U.S. insurance industry—a universe of nearly 270,000 items, which includes individual sections of law and regulation, plus advisory documents, such as bulletins and attorney general opinions.
“While this data shows that 2009 is shaping up to be a very active year, it also illustrates that staying on top of legislative and regulatory activity is a challenge that’s growing,” said Kathy Donovan, senior compliance counsel at Wolters Kluwer Financial Services.
According to Wolters Kluwer, nearly 26,000 state and federal laws and regulations pertaining to the U.S. insurance industry will change or be created this year. Additionally, about 30 percent of the regulatory activity through July of this year affects all lines of insurance business.
For many insurers, the processes of managing regulatory activity remain highly manual. “Insurers need to explore and invest in ways to better monitor the environment and minimize costs associated with non-compliance,” said Daryl James, product manager for Insurance Compliance Solutions at Wolters Kluwer.
Costs can be direct, such as increased exam activity and associated fines that result from non-compliance. However, there are also hidden costs, including possible future lost business due to higher profile instances of non-compliance, he said.
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