To say that the insurance industry is tightly regulated would be an understatement. The compliance challenges insurers face are uniquely complex in that every U.S. state maintains its own distinct insurance regulations, and these laws and policies vary widely across different lines of business. Additionally, many states maintain regulations that govern virtually every aspect of insurance company operations, including the amount of financial reserves a given company needs to conserve; how it can market its products; and how much brokers and agents can charge for their services.

Moreover, most states impose strict reporting requirements by which insurers must regularly document their compliance with the various statutes. Depending on the policy type — life, home, auto, health coverage, and so on — reporting guidelines can require a confusing array of quarterly and annual reports, such as audited financial statements, unaudited financial statements, actuarial opinions, claim data, evaluations of securities on deposit, and disclosure of material transactions, just to name a few.

Additionally, insurers now face new federal compliance reporting requirements regarding workers' eligibility for Medicare. Department of Health and Human Services policy has long held that individuals over the age of 65 (that is, eligible to receive coverage under Medicare) who are covered under an employer insurance plan must first use those employer-provided health benefits before seeking Medicare reimbursements for healthcare expenses. In other words, if you're 65 or older and still have employer-provided healthcare benefits, that employer plan is your primary plan. With the Medicare, Medicaid and SCHIP Extension Act of 2007, which went into effect in July 2009, insurers must now document the eligibility status of their Medicare-eligible beneficiaries, whether they are drawing on Medicare benefits or not. These compulsory quarterly filings to the Centers for Medicare and Medicaid Services add yet another reporting requirement to insurers' already significant load.