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Regulatory Dealings in Insurance: Meet your new Best Friends

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The Leadership Mindset

It strikes me as odd that in a highly-regulated industry like ours executives seem to often forget the importance of preparing the next generation of leaders to understand the regulatory environment and handle regulatory dealings effectively.

What is more troubling is that there are executives out there who appear to resent dealing with regulators. They consider them intrusive and offering zero value. These are very short-sighted insurance industry players.

I truly believe that most insurance regulators are business enablers. It is the non-cooperative or passive way the industry sometimes interacts with them that leads to tense relationships.

The Role of Insurance Regulators

Let’s not forget that a well-regulated insurance environment is one where the competitive playing field is leveled, shadowy operators are controlled, shut down, or fined, and the overall health of the industry is preserved. We could never reach such a state without proper regulations and regulators who have the ability and willingness to enforce them.

Regulators are tasked with making decisions to grant licenses and subsequently supervise companies to ensure adherence to solvency and capital margins, respect for good business conduct rules, and fair and efficient servicing for our customers.

This is particularly important in the claims handling stage of the customer experience. For more guidance on this topic see my blog @ How to Improve your Insurance Claims Operation and Transform it into your Front Office.

Paradigm Shift: If we don’t have licenses in good standing but have people capabilities, buildings, capital, pricing tools, website, brokers, agents, and more can we sell a nickel’s worth of premium? The answer is a resounding NO.

High Level Guidance

There are general principles you should always follow when dealing with regulators: Cooperation, openness, preparation, and coordination. It is equally key to have candid and timely communications.

The last thing a regulator wants to experience is a company going bankrupt, massive miss-selling, large-scale fraud, or any other highly-embarrassing event under its watch.

How to Manage Regulatory Relations Effectively

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> Regulators come in different shades. They vary from state to state, province to province, and country to country. Understand their priorities and operating environment and adjust your approach accordingly.

> Interact with regulators professionally, openly, in a timely manner, and with full transparency.

> Be proactive. Deliver bad news first and offer a remediation plan when there is an issue. They will most likely understand and work with you towards a win-win solution.

> Wear your best suit and bring your top team during the first regulatory meeting. Make a lasting first impression. When in doubt, over-prepare.

> Schedule regular meetings with regulators, especially ahead of submitting your required regulatory financial returns, to tell your story in person and give them a chance to ask questions. For further guidance on financial planning check out this blog Insurance Finance & Investments: Cash is Still King.

> Regulators are people too. Socialize with them if and when appropriate and don’t overdo it on entertainment. For guidance, check out my blog @ Insurance Entertaining in a Global Economy.

> When in doubt, ask and engage. A regulator could save you a lot of hassle and even enable you to better budget and deliver more profits. For guidance on budgeting check out this blog Insurance Budgeting: STOP Wasting and START Dreaming and read chapter 12, Regulatory Dealings, in The Insurance Management Playbook.

Regulatory Metrics to Monitor

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> Breaches log—KYC, AML, conduct, sanctions, customer complaints, and more.

> Frequency of regulatory meetings.

> Licensing actions and fines.

> Training frequency for your staff.

> On-time regulatory filings.

> Responsiveness to regulatory requests and risk assessment visit findings and follow up on recommendations.


Keeping your regulatory relations and license in good standing are key. You can do nothing without the license. Cherish it, hang a copy of it in your office, do not embarrass the regulators, and make sure you treat your license as one of your most valuable assets.

One significantly lacking aspect in insurance executive and leader coaching and development are regulatory relationship awareness and management. Prepare the next generation of leaders to understand the importance of smooth regulatory dealings.

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