In January 2025, President Donald Trump signed executive order 14192, titled “Unleashing Prosperity Through Deregulation.” The directive takes a bold stance: for every new federal regulation introduced, at least ten existing ones must be eliminated. This move dramatically intensifies the previous “two-for-one” policy, signaling a strong push to scale back government oversight.
While the goal is to boost economic growth and innovation, the ripple effects are being felt across industries—including insurance. With long-standing regulations vanishing quickly, insurers are stepping into uncertain territory. Without traditional regulatory safeguards executive order 14192, firms must reexamine their internal risk strategies to stay ahead.
Initial Industry Response: Opportunity Meets Uncertainty
Many businesses, particularly those burdened by regulatory compliance costs, see this as a welcome change. Reduced red tape could mean fewer audits, simpler paperwork, and lower operational expenses.
However, the road to deregulation isn’t exactly smooth. Many of the executive order 14192 provisions are already tied up in legal disputes. Repealing existing regulations involves complex procedures, and it’s unclear how swiftly these changes will actually take effect.
Within the insurance sector, the response is mixed. Some leaders praise the shift, arguing that less government interference allows firms to manage risk more effectively on their own terms. They point to the principle that “the best government governs least,” advocating for freer markets.
On the other side, groups like ShareAction and the Interfaith Center on Corporate Responsibility (ICCR) argue that regulation plays a vital role in holding companies accountable—especially on issues like sustainability, ethics, and social responsibility. In their view, oversight ensures that profit doesn’t come at the expense of people or the planet.
This ongoing debate underscores a larger question: how do we balance business freedom with the need for responsible governance?
Looking Back: What History Tells Us About Deregulation and Risk
The insurance industry has seen waves of deregulation before—with mixed results. One major example was the liability insurance crisis of the 1980s. Between 1984 and 1987, general liability premiums nearly tripled, jumping from around $6.5 billion to $19.5 billion. This dramatic increase left nonprofits, local governments, and businesses struggling to find affordable coverage—or any coverage at all.
Another cautionary tale is the Commodity Futures Modernization Act (CFMA) of 2000. This legislation removed regulatory oversight from financial derivatives like credit default swaps (CDS), allowing them to function outside the traditional insurance framework. What followed was a dangerous buildup of high-risk financial products that played a pivotal role in the 2008 financial crisis.
Because CDS weren’t regulated like insurance, financial firms could trade them without holding enough capital to cover potential losses. When the subprime mortgage market collapsed, the dominoes fell—fast. Institutions overloaded with CDS exposure began to fail, triggering a global financial meltdown. That episode made one thing clear: regulation exists for a reason.
And this isn’t just a U.S. phenomenon. In Norway, financial deregulation in the late 1980s led to risky lending behavior and a credit boom that ended in a full-scale banking crisis. When oil prices crashed, the fragile system couldn’t hold, resulting in major economic disruption.
The Road Ahead: Risk in a Deregulated Era
As deregulation picks up steam, insurance companies will need to be more proactive than ever in managing risk. Without regulatory guidelines to lean on, firms must build robust internal policies and ensure their risk models account for both market volatility and unforeseen legal shifts.
History shows that while deregulation can drive innovation and growth, it can also open the door to unchecked risk. The challenge now is to find a balance—creating space for business agility while maintaining the safeguards that protect companies, consumers, and the broader economy.
Through the Looking Glass: How Deregulation Could Reshape the Insurance Landscape
As the U.S. insurance industry steps into a newly deregulated environment, there’s growing speculation about what this transformation could mean for how insurers manage risk. While it’s still early days, several key areas are likely to see significant change.
Risk Assessment and Pricing: A New Game of Strategy
With regulatory barriers coming down, insurers may feel more freedom to take bold approaches to risk assessment and pricing. In a race to win market share, some companies could start offering lower premiums to attract customers—even if those prices don’t fully reflect the actual risk involved.
This strategy, while potentially profitable in the short term, poses a serious long-term risk. If premiums don’t cover future claims, insurers could find themselves without enough financial cushion to pay out when it matters most. In extreme cases, this could shake the financial stability of entire firms.
Product Innovation: Opportunity with a Side of Uncertainty
Deregulation might also spark a wave of product innovation. With fewer constraints, insurance providers could experiment with more customized or complex offerings tailored to evolving consumer needs.
On the surface, that sounds like a win for both businesses and customers. But there’s a catch: the more complex a product is, the harder it can be to anticipate all the associated risks. Without careful planning and robust oversight, these innovative products could open insurers up to liabilities they didn’t see coming.
Looking Ahead
As the industry navigates this shifting landscape, the key challenge will be balancing innovation and competitiveness with caution and sustainability. Deregulation creates space for growth, but also demands sharper internal controls and smarter risk management than ever before.
