Regulation After the Storm - Staying Current as United States Regulators React to Catastrophes

Abstract

For insurers, the impact of a natural or man-made catastrophe continues long after the event is over. In the U.S., insurance is pervasively regulated, with consumer interests taking the forefront of most aspects of regulation. New statutes, regulations, directives, or compliance requirements may issue from a wide variety of regulatory bodies, including State Legislatures, Departments of Insurance, State Attorneys General, courts, and the U.S. Federal Government. The regulatory environment can change daily, requiring corresponding responses or changes in the claims, underwriting, policy administration, billing, finance, communications, media, and even IT departments of insurers. Keeping abreast of these changes requires preparation, process, and, most importantly, good communication. This article examines the varied sources of regulation and directives, best practices for monitoring changes and communicating required actions, and the longer term requirements that may persist for years. It advocates preparation for the inevitable – designation of key people across various functions, advance consideration of external parties such as MGAs, TPAs and others who act for the insurer, and development of a robust process before "the next bad thing." Finally, given that insurer's beneficial actions are often ignored by the media and public, while any negatives are spun and publicized, the article concludes with an examination of the important role.