Analyzing the 10-for-1 Deregulation and Its Impact on Insurance Risk Strategies

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In January 2025, President Donald Trump signed executive order 14192, titled “Unleashing Prosperity Through Deregulation.” This executive order 14192 introduces a dramatic shift in regulatory policy: for every new regulation enacted, at least ten existing ones must be eliminated—a significant expansion of the previous "two-for-one" rule.

The goal is to boost economic growth and encourage innovation across industries, including insurance. However, this sweeping deregulatory move has disrupted the regulatory landscape, leaving insurance companies without many of the usual safeguards. As a result, insurers are being forced to reexamine their internal risk management strategies to adapt to this new, less regulated environment.

Immediate Reactions and Legal Pushback

Companies that have long struggled with the costs and complexity of regulatory compliance may welcome this policy, hoping for lower expenses related to audits and reporting. Yet, many of the deregulation efforts are already being challenged in court. Rolling back existing regulations often requires navigating complicated legal procedures and strict timelines.

This shift has sparked heated debate among business leaders. Supporters argue that reducing government intervention allows companies to manage risk more effectively and operate with greater efficiency, echoing the belief that "the best governance is the one that governs least."

On the other hand, organizations like ShareAction and the Interfaith Center on Corporate Responsibility (ICCR) view regulation as essential. They maintain that proper oversight holds companies accountable and promotes responsible practices around environmental sustainability, social justice, and corporate ethics.

This divide highlights the broader challenge: how to balance the need for business flexibility with the necessity of regulatory safeguards that protect the public and financial systems.

Deregulation in Insurance: Historical Lessons

The insurance industry has previously experienced periods of deregulation with far-reaching effects on risk management. One such example is the liability insurance crisis of the 1980s in the United States, when losses and premiums skyrocketed. Between 1984 and 1987, general liability premiums rose from $6.5 billion to roughly $19.5 billion. The crisis led to coverage shortages and unaffordable premiums for a wide range of entities, from local governments to nonprofit organizations.

Another significant case is the Commodity Futures Modernization Act (CFMA) of 2000. This law removed regulatory oversight from financial derivatives such as credit default swaps (CDS) by exempting them from state laws. The lack of regulation allowed these risky instruments to grow unchecked, playing a central role in the 2008 financial crisis.

Without oversight, financial institutions engaged in speculative trading without maintaining the capital needed to cover potential losses. When the housing market collapsed, defaults on subprime mortgages triggered widespread institutional failures, leading to a global financial meltdown. This serves as a cautionary tale about the dangers of under-regulation.

Globally, similar outcomes have occurred. For example, the Norwegian banking crisis of 1988–1992 followed financial deregulation that removed caps on lending rates. Banks took on excessive risk, and external factors—like falling oil prices—exacerbated the situation, ultimately causing a systemic crisis.

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