“Where Innovation Meets Regulation” was the theme of the National Association of Insurance Commissioners (NAIC) Insurance Summit held earlier this month. The Summit is a premier conference that brings together insurance regulators, companies and startups to explore the future of insurance regulation. There were more than 100 sessions following eight tracks, including innovation, market regulation, finance and technology. The innovation track focused on innovative thinking, new and emerging technologies and the market implications of these new trends. Panelists and presenters discussed how regulation fits into the new and inventive world. All parties agreed that the world is changing and that everyone needs to change with it.
At the Summit’s Innovation and Technology Task Force Meeting, Joyce Mellinger, SVP and Associate General Counsel for Zurich North America, testified that the laws and regulations on anti-rebating have not kept up with the loss-control innovations in the marketplace. She stated that the same laws that are designed to protect consumers could, in some instances, inhibit the adoption of loss-control solutions intended to protect consumers. Mellinger then urged the regulators to revise anti-rebating laws to recognize the value of improving risk profiles by permitting products and services that are designed to educate, assess, monitor, control or prevent risk of loss to customers, their business, or their property. Changing the law would address the current demand from customers who are seeking such products, and would provide a flexible solution for products yet to be considered.
The NAIC leadership kicked-off Day 3 with the annual Officer Panel. NAIC President Eric Cioppa, President-Elect Ray Farmer, Vice President David Altmaier, and Secretary-Treasurer Dean Cameron were joined by NAIC CEO Mike Consedine to discuss the association’s key initiatives. While innovation was a key theme, the panel did address community resilience. Director Farmer spoke about the need for preparedness and that insurers have a role in educating customers about risk mitigation. Commissioner Altmaier pointed out that many consumers do not recognize their susceptibility to risk, so education is needed. Insurers were encouraged to incentivize their customers to prepare and build back better, in addition to writing private flood insurance. The Insurance Departments also have a role to play, and that begins with communicating storm alerts.
Lynne Grinsell, of Zurich’s Government & Industry Affairs team, participated in a keynote panel: Disaster and Resiliency: To Insurance and Beyond! She was joined by others from the Insurance Institute of Business & Home Safety, the Alabama Insurance Department, and the South Carolina Department of Health & Environmental Control. Grinsell discussed Zurich’s Post-Event Review Capability (PERC) Florence and focused on opportunities and what we learned. Key recommendations included:
- A push for education on the potential impacts floods and other catastrophes could have.
- Changing the way we communicate about risk, and
- Understanding how buildings are constructed, and mitigating any issues that could save recovery dollars spent in the long run.
All agreed on the need to encourage the uptake of flood insurance, as those with insurance fare better than those without. The panel also discussed how regulators could expand their thinking on how to succeed in the areas of mitigation and resilience, even beyond insurance. Cooperation between all stakeholders was a common theme.
Finally, there were several sessions on insurer innovation strategies. From a financial perspective, it was noted that A.M. Best incorporates a company’s innovation strategy into its rating decisions. In the new products and services arena, many regulators committed to partnering with insurers as they forge ahead into the marketplace. They advised that to reduce regulatory friction, insurers should come early to discuss innovative products. Operating from a position of strength, i.e., having a good idea that makes sense will create a better forum in which to gain ultimate approval for the use of such products. Regulators noted that they are looking for a way to make it easier for all emerging ideas to take hold in this new and ever changing marketplace.
By: Lynne Grinsell
Assistant Vice President State Affairs