The goal? Spur economic growth and innovation by clearing out what some see as bureaucratic clutter. But for insurance companies, this dramatic rollback of rules introduces a new layer of complexity. With traditional regulatory guardrails being dismantled, insurers must rethink their internal risk management strategies to stay resilient in a less predictable environment.

Mixed Reactions and Mounting Legal Hurdles

Not surprisingly, reactions to the executive order have been mixed. Companies that have struggled under the weight of compliance costs may welcome this move, seeing it as a chance to lower administrative overhead and streamline operations.

However, the path to insurance deregulation isn’t as simple as crossing items off a list. Many of the efforts to eliminate existing rules are already tied up in legal challenges, as dismantling established regulations involves procedural requirements and timelines that can drag the process out.

This initiative has also reignited an ongoing debate: Should government step back and let the market self-regulate, or is some level of oversight necessary to ensure ethical and responsible corporate behavior?

Proponents of insurance deregulation argue that too much red tape stifles innovation and imposes unnecessary costs. They often cite the mantra: “The best government is the one that governs least.” But critics, including advocacy groups like ShareAction and the Interfaith Center on Corporate Responsibility (ICCR), stress that regulation plays a vital role in holding companies accountable—especially on issues like environmental impact, social responsibility, and governance ethics.

A History Lesson: What Deregulation Has Meant for Insurance

This isn’t the insurance industry’s first experience with deregulation—and history provides some cautionary tales.

Take the liability insurance crisis of the 1980s. Between 1984 and 1987, premiums for general liability coverage in the U.S. tripled—from around $6.5 billion to nearly $19.5 billion. Insurers pulled back from entire markets, leaving cities, nonprofits, and businesses scrambling for coverage or facing sky-high rates. The lack of proper oversight had led to risky underwriting practices and poor risk modeling, which caught up with the industry in a big way.

Another key example is the Commodity Futures Modernization Act (CFMA) of 2000. This legislation exempted complex financial products like credit default swaps (CDS) from regulatory oversight. The result? A booming, largely invisible market of high-risk financial bets that played a significant role in the 2008 financial meltdown. Without rules in place to ensure capital backing or transparency, financial institutions found themselves dangerously exposed once the subprime mortgage crisis hit.

And it’s not just a U.S. phenomenon. In Norway, deregulation in the late '80s and early '90s led to a banking crisis when the removal of lending rate caps fueled reckless borrowing. A collapse in oil prices and a downturn in the economy triggered widespread defaults, and ultimately, a full-blown systemic crisis.

What This Means Moving Forward

The insurance sector is inherently built around managing uncertainty, but insurance deregulation adds a new twist. With fewer external rules to guide behavior, companies will need to sharpen their internal risk frameworks. That means greater reliance on data analytics, tighter corporate governance, and more strategic foresight.

At the same time, this shift places greater responsibility on insurers to police themselves. While some see that as a win for efficiency and innovation, others worry it could open the door to the same kinds of risk exposure that led to past crises.

As the deregulation effort moves forward—and as legal challenges play out—insurance leaders must stay agile. Balancing opportunity with caution will be key in this new, less-regulated landscape.