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NAIC Insurance Summit 2017: Innovation and Disruption Are Top of Mind for State Regulators

From May 22-26 Mintz Levin participated in the annual NAIC Insurance Summit in Kansas City. A main theme of this year’s Summit was technology and innovation. The Summit was remarkable in that it served as a meeting grounds for key market players: technology incumbents, such as insurers, insurtech start-ups, venture capital firms, accelerators, producers and regulators. Several of the sessions involved presentations by start-ups to introduce their products and explain how their solutions address open issues in the present insurance market. Indeed, in one memorable session, five promising start-ups were given eight minutes each to make a pitch for their product, and were then peppered with thoughtful questions related to their models by the panelists. 
In an encouraging sign for insurtechs, the Summit certainly attempted to foster an atmosphere of an innovation. Interestingly, insurance innovation is not only being marketed to the public, but to state insurance departments as well. One of the early discussions presented to the audience, comprised largely of regulators, centered around the necessary ingredients for successful innovation. The regulators seemed to understand the need for internal innovation regarding their own processes as the market advances further in this area. Indeed, several of the insurtech presenters pitched their solutions to the regulators themselves, explaining that their products had applications for use by the general public, and for regulators as well. 
The key takeaway from the Summit is that regulators appreciate the need for innovation. However, there are several other critical takeaways that insurtech start-ups and innovators should be thinking about:

  • Compliance – Regulators want to accommodate innovation; however, the main focus is still on consumer protection, and companies must adhere to applicable state laws and regulations, including licensing. That said, the regulators expressed a willingness to work with companies on regulatory issues that affect their business models.
  • Big data and risk modeling – As carriers and other companies collect vast amounts of data, regulators are focusing on when and under what circumstances such data may be used in risk valuation and underwriting.
  • Cybersecurity – This remains a high priority in all state insurance departments. The task force charged with compiling model rules will soon be publishing a model regulation. It is anticipated that the model will closely resemble the New York regulation recently passed by the NYDFS.
  • Automation – This area, and particularly autonomous vehicles, is increasingly a topic of conversation for regulators, who are considering the ways in which automation will impact upon the auto insurance market. In addition, regulators are attempting to deal with the potential cyber-risk/hacking implications that can result from over-the-air software updates issued to autonomous vehicles.


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Gregory Hoffnagle