Insurance innovation program considered

The Banking, Commerce and Insurance Committee heard testimony March 6 on a bill that would create a program to allow entities to temporarily test insurance products or services in Nebraska.

LB587, sponsored by Lincoln Sen. Anna Wishart, would create the Insurance Regulatory Sandbox Act to be administered by the state Department of Insurance. The department would create a process through which entities could apply for a 12-month testing period related to a specific innovative insurance offering, such as a new product or technology, without having to obtain licensure or follow otherwise applicable state regulations.

Testing periods could be extending through approval by the department. Participating entities would be required to disclose risks to consumers and the department could end an entity’s participation in the sandbox program at any time and for any reason.

Wishart said the first regulatory sandbox program was launched in the U.K. in 2015 and that 12 states have adopted similar programs in an attempt to be more welcoming to innovative companies and entrepreneurs. She said she’s been working on similar legislation for several years and has limited LB587 to the insurance industry.

“It’s just as important for lawmakers to look at how we can remove outdated policy as it is for us to be introducing new laws,” Wishart said. “It is very beneficial for our state to take a hard look at these regulations and think about whether they’re truly needed or if they’re standing in the way of contemporary businesses and consumers and the environment that we live in today.”

Nicole Fox testified in support of the bill on behalf of the Platte Institute, saying it’s important to foster innovation in Nebraska. Tech entrepreneurs innovate in ways that outpace regulation, she said, and LB587 would provide them a way to test products and services with supervision from the department but with greater flexibility.

“A regulatory sandbox does not create a regulatory free-for-all, it doesn’t create an unlevel playing field and it does not put the public at risk,” Fox said.

Robert Bell, executive director of the Nebraska Insurance Federation, testified in favor of the bill on behalf of the Nebraska Chamber of Commerce and Industry, the Greater Omaha Chamber of Commerce, the Lincoln Chamber of Commerce and the American Property and Casualty Insurance Association.

Technology is changing how consumers interact with insurance, Bell said, with more people relying on mobile devices and young people purchasing their first insurance products. New technology, however, often is met with unnecessary “statutory roadblocks,” he said.

“Nebraska insurers believe that the sandbox program outlined in LB587 will serve as an important framework to let [companies] know that Nebraska is open for business,” Bell said.

No one testified in opposition to the proposal and the committee took no immediate action on it.