Navigating the Impact of 10-for-1 Deregulation on Insurance Risk Strategies
In January 2025, President Donald Trump signed executive order 14192, titled “Unleashing Prosperity Through Deregulation.” This order significantly ramps up the government’s deregulatory push by mandating that for every new regulation introduced, at least ten existing regulations must be scrapped. It’s a major shift from the earlier “two-for-one” model and sets the stage for sweeping changes across industries—including insurance.
While the intent behind this order is to promote economic growth and boost innovation, it also creates new challenges for insurers. With fewer regulatory guardrails in place, companies must reassess how they manage risk in a landscape where the old rules no longer apply.
First Impressions and Legal Hurdles
For many businesses, particularly those long burdened by regulatory compliance costs, the 10-for-1 order offers a sense of relief. There’s hope that reduced oversight will free up resources and lower administrative overhead. But the road to deregulation isn’t straightforward.
Several of the proposed rollbacks are already facing legal challenges. Dismantling regulations often requires complex procedures, public input, and time—meaning the process will be anything but immediate.
In the meantime, the business world is split. Supporters of the order argue that less government intervention gives companies the freedom to manage risks on their own terms, potentially driving efficiency and growth. On the flip side, advocacy groups like ShareAction and the Interfaith Center on Corporate Responsibility (ICCR) believe that smart regulation helps companies stay accountable, especially on issues like environmental sustainability, social responsibility, and governance.
This debate underscores a deeper question: How do we balance the need for business flexibility with the need to protect consumers, the economy, and the environment?
Lessons from the Past: Deregulation and Insurance
This isn’t the first time deregulation has reshaped the insurance industry. History offers a few cautionary tales.
Take the liability insurance crisis of the 1980s. Premiums skyrocketed from $6.5 billion in 1984 to nearly $20 billion just three years later, leaving many municipalities and nonprofits struggling to find affordable coverage. A lack of regulation helped fuel market instability, and the effects rippled across sectors.
Then there was the Commodity Futures Modernization Act (CFMA) of 2000. By removing oversight from derivatives like credit default swaps (CDS), the law allowed financial institutions to take on massive risks—without adequate safeguards. The consequences of this deregulation were devastating, playing a central role in the 2008 financial collapse.
Globally, similar stories have unfolded. Norway’s banking crisis in the late 1980s followed rapid deregulation that led to risky lending practices. When the oil market crashed, it took the overexposed banking sector down with it.
These examples highlight a consistent theme: while deregulation can unleash innovation, it can also open the door to hidden risks if not carefully managed.
Where Could Deregulation Take Us? Key Areas of Concern for Insurers
As the insurance sector adjusts to this new regulatory environment, several areas are likely to see major changes:
1. Risk Assessment and Pricing Strategies
Looser rules could tempt insurers to adopt more aggressive pricing models to stay competitive. While this might bring short-term gains, it could also result in underpriced policies that don’t adequately cover risk—leaving insurers vulnerable in the long run.
2. Product Innovation (and Complexity)
With fewer restrictions, insurers might roll out more customized or innovative products. That sounds promising, but it could also mean an increase in poorly understood or high-risk offerings. Without rigorous internal checks, the industry may see a rise in liabilities and unexpected losses.
3. Capital Adequacy and Solvency
Regulations typically require insurers to hold enough capital to stay solvent in tough times. Relaxing these requirements could improve margins but at the risk of insolvency during crises. It’s a gamble that could hurt both companies and policyholders.
4. Risk Equalization and Fair Access
Risk equalization—tools that help balance high- and low-risk policyholders—may be weakened. This could lead to higher premiums for vulnerable groups and fewer options for people with greater health or financial risks.
5. Consumer Protection and Market Stability
Deregulation might lead to cutthroat competition, with firms taking on bigger risks to chase profits. History has shown that this kind of environment can destabilize markets. If oversight is dialed back too far, consumers could face reduced protections, including denied claims or misleading policy terms.
Moving Forward: Insurance Risk Management in a Deregulated World
No matter where you stand on deregulation, one thing is clear: eliminating rules doesn’t eliminate risk. Instead, it shifts the responsibility onto the shoulders of individual organizations. For insurers, this means doubling down on internal risk management practices to protect themselves—and their clients.
Without clear regulatory guidelines, companies must be proactive. They need to build robust frameworks to identify emerging risks, ensure adequate reserves, and monitor solvency—even when no one’s looking over their shoulder.
executive order 14192 may still be in its early stages, but its long-term effects on the insurance industry could be profound. Whether it leads to a new era of innovation or sows the seeds for the next crisis depends on how companies respond—and how well they can manage risk in an environment with fewer rules and more freedom.
