There is no insurance without regulation: it’s key for protecting consumers and keeps insurance viable. However, does it reach a point where regulation begins to hinder growth? There is growing evidence that complex regulation can drive higher costs and premiums. For example, recent research commissioned by the British Insurance Brokers’ Association (BIBA) found that high regulatory costs were impacting premiums by 5.2%. A spokesperson from the Insurance Council of Australia told ITIJ that Australia’s insurers navigate 250 separate regulatory instruments containing around 30,000 individual obligations, costing the industry up to A$3.5 billion (US$2.5 billion) annually. “These compliance costs add between 4 and 6% to premiums – money that comes directly out of customers’ pockets,” they stated.

There is also the burden regulatory compliance can place on time and resources. Indeed, in some firms, more than 26% of employees’ time is dedicated to regulatory duties. Furthermore, regulatory fragmentation is enhancing risk. One survey found that 56% of executives considered regulatory complexity to pose a significant business risk.

“Growth and innovation in international health insurance are most constrained by the increasing complexity and fragmentation of regulation across jurisdictions,” said Joe Thomas, Managing Director of APRIL International UK. “Licensing and distribution rules vary significantly by country, particularly where products are sold crossborder.

This creates practical barriers to scale as insurance providers must often adapt products and processes market by market, even when customer needs are largely consistent across markets.”

The ability for insurers to overcome regulation as a potential roadblock is ‘regulatory agility’, which encompasses speed, resilience, and adaptability in the face of evolving rules.
 

Compliance costs add between 4 and 6% to premiums – money that comes directly out of customers’ pockets

Fragmentation: from bad to worse
Regulatory fragmentation is a long-standing, ongoing issue for insurers and is intensifying. Elliott Draga, President of the Travel Health Insurance Association of Canada (THIA), said that insurance regulations were fragmented in Canada and that uncertainty and rigidity only made matters worse. “Each province or territory (there are 13 in total) has its own rules and regulations, creating compliance complexity, and could prevent scalable nationwide product launches. As an example, each province has different requirements for licensing of the individuals who sell travel insurance,” he explained. “For travel insurance, there is an additional challenge as there can be uncertainty as to which rules apply, given that travel insurance is a hybrid product. The cumulative effect of regulations has a restrictive effect, as each new regulatory initiative adds to the burden. Some regulations in particular, such as the Quebec Regulation respecting Alternative Distribution Methods, are highly prescriptive, which leads to additional compliance costs and a lack of flexibility.”

Fragmentation can also negatively impact product evolution. Thomas said that mandated policy wording and approval processes reduced flexibility. “This makes it harder to update benefits or introduce personalised or modular features in response to evolving healthcare needs. This is especially relevant as the market moves toward more flexible or modular coverage, where benefits are designed to be adapted to different lifestyles, travel patterns or regional needs, but are harder to deploy consistently under fragmented regulatory frameworks,” he highlighted.

Slow and not steady
Amber Musson-Thorp, a healthcare and insurance consultant, has seen the operational consequences firsthand. “When each market requires its own data hosting, licensing, reporting and operational setup, it reduces the benefits of scale and creates fragmented operating models. This increases cost, slows down speed to market, and makes regional propositions much harder to execute efficiently, even for very large global insurers,” she explained. “I recently had a case where there were 10 employees across three regions and two of the largest insurers declined even though they’re fully compliant in each region.

The prospect of setting up a micro group with only a couple of employees on each licence wasn’t offered and I can only assume that is because of the complexities of pulling it together under one plan and the cost that goes along with this. This is a barrier to business for SMEs as they have to have multiple plans for a small group.”

Thomas said that a key challenge was that conduct and consumer protection requirements were becoming increasingly prescriptive. “While these rules are essential to protect policyholders, they can limit flexibility in product design and slow the introduction of new benefits or pricing models, particularly when approvals or regulatory interpretations differ between regulators,” he explained.

A strain on innovation
In some markets, regulatory structure presents a key barrier to innovation. Stephen Samataro, Chief Revenue Officer at AXA Partners US, said that the biggest strain on innovation in the US was the state-by-state regulatory system. “You can have a product ready, but going national means working through 50 different rules and approval timelines, which slows everything down,” he explained.

“Each state can mandate different coverage minimums, require specific policy language, restrict certain exclusions, or disallow specific benefits. This not only restricts growth, but also limits the options available to residents in those states.”

Data regulation is another point of contention. Thomas said that regulations governing where data can be stored, processed or accessed often require insurance providers to maintain multiple systems or local infrastructure. “This increases costs and limits the ability to offer fully centralised digital health journeys,” he explained. “From a product design perspective, these rules can restrict the use of global data pools that would otherwise support more refined underwriting, pricing, proactive case management, and fraud oversight. As a result, pricing may need to be more conservative in certain markets due to reduced data visibility or limitations on cross-border analytics. This can also constrain the rollout of more innovative and personalised propositions, such as preventative care pathways or data-led wellbeing support, even where customer demand is increasing.”

The cumulative effect of regulations has a restrictive effect, as each new regulatory initiative adds to the burden

Scaling limitations
Musson-Thorp told ITIJ that the biggest immediate impact she was seeing was cost and structural complexity. “Requirements to keep data in-country often mean insurers need to work through local partners or fronting arrangements. This introduces additional fees and infrastructure costs into the model. Some of this is visible in pricing, and some of it is absorbed by insurers in the back end, but either way, it changes the economics of product design and crossborder distribution. Over time, this also influences which products are viable to launch in certain markets and which aren’t, particularly for international insurers trying to scale regional platforms.”

In Canada, Draga highlighted Quebec as the most restrictive environment due to the combination of strict privacy laws and French-language requirements. “Insurers are required to design products for the highest compliance standards, which can limit digital innovation and create inconsistent customer experiences across provinces,” he said.

In the US, cross-border distribution remains particularly challenging. “It’s tightly controlled,” Samataro commented. “If you’re selling to a US resident, you generally need the appropriate US insurance licences, even if the insurer or platform is based abroad. That limits true global distribution models and forces products to be localised with separate filings, disclosures and pricing, adding cost and slowing scale.”

When regulation enables innovation
Despite these challenges, regulation can also help elevate standards and promote innovation. Thomas has seen clear examples of this. “Clearer frameworks around digital engagement, claims transparency, and customer outcomes have encouraged insurance providers to invest in better technology, more intuitive customer journeys, and higher service standards,” he stated. “Telehealth is a particularly strong example. In Singapore, the Ministry of Health has taken a progressive approach, actively encouraging the use of video consultations to ensure a high standard of care, especially where clinical assessment, diagnosis or treatment decisions are involved. This kind of regulatory clarity gives providers the confidence to invest in robust telemedicine solutions.”

Samataro agreed, reiterating that the biggest positive shift had been around telemedicine and virtual care. “Regulators became much more open to digital health after Covid, and that’s been a real win for travellers. It’s allowed insurers to offer faster access to care and build better assistance-led products,” he stated.

Strong governance and solvency regimes can also create competitive advantage by reinforcing trust. “Providers that demonstrate financial strength, transparency, and regulatory discipline are better positioned to support multinational employers and globally mobile individuals, particularly in an environment where reliability and continuity of care are paramount,” Thomas underlined.

Unlocking innovation
Musson-Thorp highlighted similar dynamics in Kenya and Qatar, where tighter onshore requirements have strengthened markets. “As insurers come onshore and adapt to new regulatory frameworks, we’re finally seeing new, viable international products entering the market again,” she explained. “For example, Bupa’s re-entry in a meaningful way – that’s a very positive development or both brokers and customers and shows that good regulation can unlock, not just restrict, innovation.”

In Canada, Draga outlined recent progress on licence recognition between provinces. “For example, in the province of Ontario in June 2025 the Protect Ontario Through Free Trade Within Canada Act 2025 received royal assent. The bill removes barriers to trade in goods and services, to labour mobility, and to investment between Ontario and other jurisdictions within Canada, which includes allowing individuals who are licensed in selling insurance in one province to be recognised in another province,” he said.

As insurers come onshore and adapt to new regulatory frameworks, we’re finally seeing new, viable international products entering the market again

Mitigating fiction with adaptability
There are practical steps insurers and intermediaries can take to mitigate regulatory friction while remaining compliant. A key part of this is remaining adaptable. “In our region, regulation is no longer a surprise – adaptation has become a core capability for both insurers and brokers,” Musson-Thorp commented. “The most practical steps are building flexible operating models, investing early in compliance and governance, forming strong local partnerships, and staying engaged with regulators rather than reacting late. As an adviser, I personally welcome stronger regulation: better governance improves advice quality, reduces fraud, waste and abuse, and ultimately creates healthier, more sustainable insurance markets. In some markets, regulation done well is not a barrier to growth, it’s a foundation for it, although this depends on the territory.”

Engagement is also key. A spokesperson from SURA Colombia said: “Participating in regulatory advocacy, including submitting comments on proposed regulations, suggesting wording changes, or even proposing new articles not originally included, allows insurers to contribute technical expertise and industry experience to the regulatory process, helping build regulatory ecosystems favorable to business development and the country’s growth while strengthening relationships with government entities and trade associations.”

Education and adaptation
Thomas agreed that early investment in regulatory understanding was beneficial. “Insurance providers and intermediaries that invest early in regulatory understanding, maintain regulatory foresight, and engage constructively with regulators are better positioned to anticipate change and adapt efficiently,” he highlighted. “Embedding compliance expertise into product development and digital transformation from the outset also helps reduce friction and delays.”

Thomas pointed out that education also played a key role. “Ongoing training for advisers and internal teams helps ensure regulatory requirements are understood not as obstacles but as part of delivering sustainable, compliant, and customer-centric international health solutions,” he stated. While rules and regulations are an intrinsic part of the insurance landscape, fragmentation and prescriptive rules can increase costs and limit innovation. “Overall, the challenge is less about any single regulation and more about the cumulative impact of rules and regulations that increase time to market and operational complexity,” said Thomas. It’s this combined effect of regulations that creates a barrier, and the industry’s ability to adapt, engage, and innovate is key to regulatory agility.