What Regulators Want from Insurance CEOs (And Why Many Get It Wrong)

From the Chair | Encina Consulting

The most destructive assumption a regulated business can make is that the regulator is at best a constraint and at worst the enemy.

It is surprisingly common. I have sat in boardrooms where senior executives described their regulator as ill-informed, commercially naive, poorly educated and actively damaging to the business. The language ranged from frustrated to contemptuous. The regulatory relationship was adversarial. And in every one of those cases, the business was spending a disproportionate amount of its leadership bandwidth managing the consequences - formal reviews, information requests, supervisory pressure, enforced remediation.

None of it was necessary. All of it was avoidable.

Who the Regulator actually is

Before you can manage a regulatory relationship well, you have to understand who you are actually dealing with.

The supervisory team assigned to your business is likely under-resourced and, in places, underskilled. Regulators cannot compete with the private sector on compensation, which means the best talent does not always end up there - though there are genuine stars, and when you find them, treat them accordingly. The team supervising your business probably has a portfolio of firms to cover. They may spend a few hours a year genuinely focused on yours. In that time, they are expected to form a view on a business that took you six months to understand properly.

They are not stupid. They are constrained. Their decisions are likely scrutinised more than yours.

They are also, fundamentally people who care about what they do. They went into regulation because they believe in it. They are under enormous pressure to make sure nothing bad happens on their watch - because when an insurer fails, it is not just shareholders who suffer. Policyholders lose as well and the wider market is destabilised. In some cases, the economic consequences extend to an entire country. That pressure makes regulators cautious. It makes them conservative. It makes them ask more questions than perhaps seems necessary. Understanding this genuinely, not just intellectually, changes everything about how you engage with them.

What actually builds regulatory trust - learning what Regulators actually want from Insurance CEOs

The CEOs and businesses that build genuinely strong regulatory relationships do a small number of things consistently and over a long period of time.

They start with no surprises. The regulator should never hear something significant about your business for the first time in a formal submission or, worse, from a third party. If something has gone wrong, or is going wrong, tell them. Tell them early, tell them honestly, and tell them what you're doing about it. This single discipline, practised consistently over years, builds more trust than any amount of polished board presentation.

Companies doing this well invest in helping the regulator understand the business. Most supervisory teams do not deeply understand the businesses they oversee. That is not a criticism, but it is a structural reality. The best-run firms treat this as an opportunity. They offer to educate. They invite the regulator to a board meeting once a year - not to perform, but to genuinely include them. They spend money on making the business legible: clear narrative, good data, honest framing of risks and how they're being managed.

They decide on a story and repeat it. Consistency is credibility. The regulator sees dozens of firms. The ones they trust are the ones whose narrative is coherent over time and whose strategy, risk profile, and governance all point in the same direction, year after year. Changing the story, contradicting previous positions, or presenting a different picture to different parts of the supervisory team destroys trust faster than almost anything else.

Best practice is asking the regulator what they need. This sounds obvious but it almost never happens. Most firms tell the regulator what they think the regulator wants to hear. The firms that ask - openly, directly, with genuine curiosity - often get answers that reshape the relationship entirely. The regulator may say "it's up to you to tell us." Good. Then tell them. Give them options. Make their job easier. Become, over time, the firm they look forward to dealing with rather than the one they dread.

And they never forget what is at stake. If your business fails, it does not just affect your shareholders and your staff, it affects your policyholders. It affects confidence in the market. In some cases, it affects the financial stability of an entire jurisdiction. Regulators carry that weight every day. The firms that understand this and govern themselves accordingly are the ones that earn the deepest, most durable regulatory trust.

The adversarial approach is not just unpleasant. It is strategically self-defeating. The regulatory relationship is one of the most valuable assets a regulated business has. Treat it accordingly.

At Encina Consulting, we offer expert assistance on this and any other aspect of Risk Function training and management. Book a confidential call here to discuss what you and your team most need and we'll be in touch soon.

Jon Macdonald | Risk Governance Advisor & CEO Coach | Founder, Encina Consulting

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