Last Updated 2/19/2020
Issue: The very nature of the business of insurance is transforming, driven by technological advancements and socio-economic trends. Emerging technologies—like big data , the Internet of Things (IoT), mobile technology, artificial intelligence (AI), wearable devices and blockchain —are revolutionizing the insurance industry and changing consumer expectations and preferences. Consumers are increasingly well versed in new technologies and looking for a more hands-on approach to managing their finances and purchasing insurance products.
Consequently, technology-enabled innovations in the insurance industry, or InsurTechs, have emerged to offer simpler products and streamlined customer experience. The Insurtech sector continues to gain momentum and garner attention from both venture capital (VC's) and established insurers. State insurance regulators have taken numerous steps to better understand how new and innovative technologies are transforming the sector. The NAIC formed the Innovation and Technology Task Force in 2017 to monitor technology, data collection and cybersecurity developments in the insurance industry.
Background: InsurTech can be described as the innovative use of technology in insurance and is a subset of FinTech, or financial technology. FinTech has transformed the banking world (e.g., Square, one of the most recognized FinTechs, offers mobile payments with innovative smartphone card swiper technology) and now InsurTech is altering the business models and competitive landscape of the insurance industry. InsurTech activity has increased significantly over the last few years and continues to attract significant attention. Deloitte estimates InsurTech startups have attracted $16.5 billion in investments over the past decade.
InsurTech innovation is occurring across the entire insurance value chain—from distribution and marketing, product design, underwriting, claims management and balance sheet management and across all lines of insurance—property and casualty, life and health. InsurTech startups are reaching customers through new distribution mediums—addressing shifts in the way people communicate, access information and make decisions—while not disturbing traditional channels.
Status: New innovations are constantly emerging and state insurance regulators do not wish to stand in the way. Instead, they want to work closely with innovators to make sure laws and regulations are being followed and consumers are not being harmed. The NAIC Innovation and Technology (EX) Task Force was established to help insurance regulators stay informed on key developments. This includes new products and services from startup companies, as well as established insurance industry players. The Task Force marks an important step in state insurance regulatory efforts to increase engagement in new and innovative technologies.
The Task Force meets regularly to learn more about innovative insurance solutions. The Task Force completed a survey in 2018 concerning what states are doing, organizationally and operationally, regarding innovation and technology. Each state was asked to identify a contact as the point person for questions related to innovation and technology. The list of contacts is available on the NAIC website. In addition, state insurance regulators, through the Task Force, are focused on a number of regulatory areas where innovation may be meeting obstacles like anti-rebating laws, the cancellation notice process and e-signatures.
Task Force members and other regulators also regularly participate in a variety of settings to further the dialogue. This includes the NAIC Insurance Summit, where the NAIC and CIPR host sessions dedicated to educating the public about how emerging technologies are impacting the insurance industry. NAIC Task Force members have also attended events at InsureTech Connect, Plug and Play, Global Insurance Symposium, participated in NAIC forums related to autonomous vehicles and with start-ups in Silicon Valley and participated in cybersecurity symposiums held jointly with Stanford University.
Committees Active on This Topic
When Innovation Meets Regulation
January 2019, CIPR Newsletter
Swipe Right for On-Demand Insurance
March 2018, CIPR Newsletter
The Growing Impact of Wearable Technology
November 2017, CIPR Newsletter
How Artificial Intelligence Is Changing the Insurance Industry
August 2017, CIPR Newsletter
How InsurTech is Reshaping the Insurance Industry
March 2017, CIPR Newsletter
August 2018, CIPR Event
Regulatory Evaluation 2.0 - Meeting the Challenges of Innovation
December 12, 2016, CIPR Event
Technology and Insurance
April 5, 2016, CIPR Event
September 26, 2018, CIPR Webinar
March 12, 2018, CIPR Webinar
November 13, 2017, CIPR Webinar
Media queries should be directed to the NAIC Communications Division at 816-783-8909 or email@example.com.
Director, Coordination of Data