Summary
Amendment to Life Insurance Regulations, registered June 2009, modifying requirements for life insurers including licensing, capital adequacy, conduct standards, and policyholder protections.
Reason
Life insurance regulation creates substantial barriers to entry through capital requirements and licensing regimes that protect incumbent insurers, reduces consumer choice by restricting product innovation and pricing flexibility, and imposes compliance costs that are passed on to policyholders. Information asymmetries in insurance can be addressed through mandatory disclosure requirements without the extensive conduct regulation and price controls that distort market signals. The policyholder protection scheme, while seemingly beneficial, creates moral hazard encouraging risky underwriting. Given the amendment was made in 2009, it likely added further regulatory burden rather than reducing it.