In the technology realm, self-driving cars and big-data analytics present the biggest regulatory challenges to the insurance industry in the near term. That's according to a panel of experts who spoke at the Property/Casualty Insurance Joint Industry Forum in New York Tuesday.
The biggest barrier to approving new innovations comes because regulators don't quite understand the technologies insurers want to use. As a result, industry-wide modernization efforts are colliding with the regulatory framework, says Ted Nickel, commissioner of insurance at the Wisconsin Insurance Department.
“Existing technology doesn’t fit within the regulatory toolbox,” said Nickel. “Regulators cringe a little bit and it is easier to say no because of that.”
Nickel was elected president of the National Association of Insurance Commissioners in December. One of his goals for 2017 is to spend more time familiarizing himself and his regulators with the new technologies permeating the industry, he said.
In 2016, the NAIC created the Big Data Working Group, a committee that delves into insurers’ use of analytics for claims and marketing. Nickel announced plans by the organization to expand the committee’s focus to understand other forms of innovation as well.
Arguably the biggest questions asked of regulators and insurance companies will be how to underwrite policies on self-driving cars when they hit the street, according to Ian Adams, senior fellow at the R Street Institute, a non-profit public policy research organization.
“With autonomous vehicles you have to think about who is responsible for buying insurance,” said Adams, adding that driver experience will likely be irrelevant in such cases.
“The tech is being developed quickly. We get the sense that self-driving cars will appear in 2020 or 2021, right in line with these companies’ timelines,” he said.
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