Legal Brief: The Downside of a Government Mandate

October 13, 2023
Security Business Magazine

Types : Bylined Articles

If the law required security sensors on all access points, it might not be the boon integrators would think it is

My family does not watch a lot of TV, but we do watch sports. Watching sports is fun – it is the original reality television; however, it also means you see a lot of commercials for beer, trucks, fast food, and car insurance. Actually, car insurance commercials are featured in all sorts of television programs, because there are a lot of competing car insurance companies with large advertising budgets.

Why is that? Because the law in every state requires that, to own and operate a car, you must have insurance. Therefore, the demand for car insurance is very high, and when demand is high, there are usually more entrants into the marketplace. Although insurance is a heavily regulated industry and the barriers of entry are high, we can tell from just watching television commercials that there are many insurers out there – like Liberty Mutual, GEICO, State Farm, Allstate, and others. The takeaway is that legal mandates like car insurance requirements breed economic opportunity.

Now, let’s apply this fundamental concept to the business of electronic security – particularly in the intrusion security market. Imagine that every state passed a law that required all home or business owners who purchase an intrusion system to purchase a sensor on every potential access point in their home. This would be an epic boon for the security industry – resulting in billions of dollars of sales for existing market participants and in many new entrants to the market. This would also inherently increase security.