The insurance industry in theU.S.has evolved significantly. One of the major reasons for the industry's tremendous evolution and growth is that theU.S.is one of the most litigious countries in the world. But rapid growth hasn't helped companies tackle the three biggest challenges facing the industry today.

The first is regulation and compliance. Regulation at the state level has spurred the creation of a number of small insurance companies specific to particular states. When these companies want to grow, the only option they have is to expand into other states and compete by eating into each other's business rather than growing because there is an increased demand in the marketplace.

The second challenge is that the products being introduced by insurance companies are market-specific or even targeted to groups and communities that they are trying to service. This combined with state regulations, is making product innovation harder to achieve. In a recent Limra report, theU.S.was considered third best in product innovation behindAustraliaand theUK. However, many countries are moving toward menu-driven insurance plans, in which consumers choose the coverage they need across life, health, and p&c, and insurance companies price the premium rather than sell specific products.