This report covers the responses Insurance received for their RFI on Charge #2, relating to studying the adequacy of the state’s insurance laws on regulating the introduction of insurtech products into the Texas insurance market. The RFI for this charge can be found here and a complete list of responses can be found here.
The HillCo report below is a summary of information intended to give you an overview and highlight of the various topics included in the responses. This report does not cover the entirety of each response, but aims to provide an overview of the testimony submitted.
Association of Fire and Casualty Companies in Texas
- New technology laws or regulations may slow down innovation and place Texans at a competitive disadvantage
- Recommends legislation to not be inconsistent with that in other states
- 2006 legislation sought to give the regulator complete control over the use of technology if it impacted in all lines of insurance
- Does not support legislation that would follow similar suit as it could eliminate innovation and would give more power to the regulator rather than management
- Highlights how technologies used by insurers have resulted in increased efficiency/lower costs
- Committee needs to define “big data” and “artificial intelligence” more clearly in their charge
- Committee should review blockchain charge with cybersecurity in mind
- Should review the NAIC Model Data Security law as it pertains to abilities of regulators to assure licensees have means to prevent cyber risks
- Supports a review that may lead to a change in Texas rebate laws
American Property Casualty Insurance Association
- Legal framework must keep pace with customer desire for most updated technology
- Supports influence of AI and enumerates dangers of legally limiting AI presence in this industry
- Current anti-rebate laws have become a deterrent to socially beneficial innovations
- Highlights NAIC is working to develop amendments to the Unfair Trade Practices Model Act and a Rebate Reform Model Act to make the insurance industry more consistent
- Should amend nonrenewal statutes with regards to short term policies, where the term of coverage is shorter than the term of notice
- Encourages facilitating e-commerce
- Regulatory sandbox should be regulated but ultimately encourage flexibility
Independent Insurance Agents of Texas
- Should ensure that those working for online insurance policies are insured agents
- Internet providers that interact with consumers should be licensed by TDI
National Association of Mutual Insurance Companies
- Promotes laws that foster flexibility and innovation
- Supports modification of Texas anti-rebating statutes and electronic communication with policyholders
- Sandbox must meet certain regulatory criteria:
- Should address regulatory restrictions that will inevitably be seen in the market:
- Should be open to all existing market participants; new market participants do not get special treatment
- Confidentiality and trade secrets must be stressed
Office of Public Insurance Council
- Overall supports Insurtech; has the potential to make insurance more convenient
- Enumerates risks of Insurtech including, can promote micro-tiering and “swiping” on and off may be “detrimental” to consumer coverage
- When considering sandboxes, they acknowledge need for safeguards against discrimination, excessive rates, and disclosure of personal data
Texas Coalition for Affordable Insurance Solutions
- Promotes research studies to foster a dynamic, private marketplace in Texas
- Discusses concerns with regulatory sandboxes
- Innovation could be stifled if legislator puts effort into sandbox rather than broad-based infrastructure
- Could lead to excessive discretionary authority for regulator and lead to bifurcation of regulation
- Texas law does not prohibit the use of big data or AI by intelligence companies
- Big data can be useful, but insurers are responsible for compiling accurate data
- Notes discrimination can occur if issuance of the devices is not consistent
- Claims that blockchain can provide a reliable audit chain and make it resistant to modification
- Recommends regulatory guardrails regarding sandboxes
- Amend where the term of coverage is shorter than the term of notice
- Big data could cause increased complexity of models that can both foster and hide racial disparities
- Thinks big data could blur the lines of personal privacy
- Enumerates concerns about sandboxes, including concerns with: power given to attorney general rather than state regulatory authorities and leaves consumers “holding the bag” if the program causes them harm
- Notes that Insurtech and other advancements are neutral but to approach with caution in regard to their ability to increase discrimination