Edited by Julian Burling and Kevin Lazarus
Chapter 16: Enforcement: A Survey of Three Approaches to Insurance Regulatory Enforcement: The USA, the UK and Sweden
Aviva Abramovsky, Ian Mason, Robert Tischner and Stefan Bessman 1. INTRODUCTION The concept of regulation of an industry cannot exist without an examination of how such regulatory systems are enforced. No industry is without its bad actors or inappropriate risk takers and a lack of enforcement action does not always reﬂect a healthy system. Faith in any regulatory system requires not only the existence of a proper regulatory scheme, but also the robust enforcement of those schemes and the regulated industry’s knowledge and acceptance that proper enforcement will occur. Enforcement is the consequence of improper behavior, but in insurance, as with other ﬁnancial services industries, such enforcement takes two main forms. First, each national system has a series of enforcement mechanisms in place to supervise and review compliance with regulations prior to the risk necessarily causing any harm other than its deviation from the regulatory standards. Such standards exist, of course, for speciﬁc policy and prudential reasons and much regulatory effort is focused on ensuring compliance with the enacted regulations. Enforcement in this context may come in a number of different forms and may be informal discussions with insurers to request that they improve their compliance with certain rules. The second form of enforcement, the instigation of suit or legal proceeding (including disciplinary action by the regulator under its own rules, proceedings in the civil/criminal courts by regulators or private actions), is both more grave and, as a result of the difference in legal systems, more reﬂective...
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