State insurance commissioners don't want to stand in the way of insurtech innovations, four regulators agreed during a panel discussion at the Global Insurance Symposium this week.
Commissioners from Oregon, Iowa, Maryland and Wisconsin reminded audience members that it's their job to advocate for consumers and exhibit healthy skepticism about new ideas. They implored innovators to not be scared off by regulators, and to come to them early in the process with open lines of communication.
"What frightens regulators is the unknown. If an idea comes in detail so we get how it functions" they are better able to guide companies through the regulatory framework, said Ted Nickel, Wisconsin's insurance commissioner. "We need to know so we all are primed to better understand how ideas are applicable to the marketplace."
Oregon's Laura Cali Robinson, who heads up the National Association of Insurance Commissioner's insurtech task force, agreed. Even if a technological initiative hits a regulatory stumbling block, she added, regulators can serve as a resource to find a way to make it function within the framework.
"It's easy as a regulator to see something new and think how it can go wrong. but those problems may only be revealed, they may not be new," she said. "You need to think about whether these concerns are already there in the market."
Iowa's Doug Ommen agreed. He says that as insurance changes fundamentally, regulations have to go along with it, because new ways of solving problems are made possible by technology.
"Some of our traditional tools for protecting consumers, may not neatly fit in a circumstance where there's micro segmentation of rates, for example," he said. And even if a innovation may appear to encourage fraud, he adds, "Today it's prohibitively expensive for insurers to examine every risk, and people can commit fraud today. But the percentage of the population that's doing that is already very low. and might be narrowed by some new approach to the problem."
Robinson says that the task force she heads, as well as the big data working group within it, are efforts by the states to combine resources and get a more holistic understanding of the issues insurers and technology companies are facing.
"In state government, we often feel under-resourced and that we can't attract the talent we need to keep up," she says. "Some of the things were doing through the working group and task force is to get a common understanding of what's happening in our markets. Its creation reflects the recognition that we've got to be on board with innovation, and be proactive learning about and supporting it."
Ultimately, says Maryland's Alfred Redmer, insurtechs need to understand that their ideas are subject to regulation, and that working together with regulators is the best path to approval.
"It's astounding to me the number of folks that have been investing in the insurtech space that don't understand they're investing in a regulated market," he says. "But if you can explain what the model is, we can help guide you in the right direction based on the regulatory structure, and we can identify the things we need to change to allow that to take place."
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