As more commercial drones take to the skies, someone is going to have to insure all of those commercial vehicles, owners and pilots, observes Seth Rachlin, vice president of insurance at Capgemini.
“The industry continues to display tremendous innovation in being able to respond to new risks,” Rachlin says. “When new risks come into the market, entrepreneurs within insurance companies figure out ways of covering them. They often go to the excess and surplus markets.”
For insurers, one of the benefits of that route, according to Rachlin, is that the filing requirements are substantially lighter, as is the level of Department of Insurance reviews: “Over time, as regulators get more comfortable, these things become admitted products and become part of standard line coverages.”
One recent example is cybersecurity insurance, Rachlin says. “That was a new frontier five to 10 years ago, and now standard lines companies are offering those to customers either as part of broader technology coverage or on a standalone basis.”
The path to regulatory approval, though, can be long. In the recent case of cybersecurity, the National Association of Insurance Commissioners (NAIC) formed a task force and drafted “Principles for Effective Cybersecurity Insurance Regulatory Guidance,” a document intended to help state insurance departments “identify uniform standards, promote accountability and provide access to essential information,” the NAIC said.
The association then issued a request for comment; insurers, insureds and other interested parties can submit letters expressing their opinions or describing their experiences, all in an effort to shape the emerging regulations. The NAIC then would develop a model regulation that states can adopt or adapt.
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