Insurance Innovation Watch

A blog covering legal developments in InsurTech, Cybersecurity, and other breaking insurance issues

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Artificial intelligence (AI) allows computers to mimic tasks typically performed by humans. The use of AI in many industries results from its ability to digest a large volume of data in a short amount of time. The insurance industry has great potential to use AI to provide more personalized solutions for customer needs. Kara Pike, an associate in the firm’s Insurance Practice, talks about how companies may use AI in the distribution of insurance, as well as regulatory concerns that have been raised.
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Continue Reading Regulatory Impact of Artificial Intelligence Use in Insurance

Potential Uses of Blockchain Technology in the Insurance Industry
For the most part, blockchain technology is still in its experimental stages. The most widely known use of blockchain technology outside the insurance industry is with Bitcoin and other cryptocurrencies. But, there are also a host of potential uses in the insurance industry. In Part One, we explained blockchain technology and its benefits. This article will identify potential uses of blockchain in the insurance industry.
1. The “Smart Contract” and Claims Processing
Through the use of “smart contracts,” blockchain can assist insurers in managing claims in a transparent, responsive and irrefutable
Continue Reading Blockchain in the Insurance Industry Series: Part 2

New York Amends Regulation 187 (now called “Suitability and Best Interests in Life Insurance and Annuity Transactions”)
Effective August 1, 2019, the New York Department of Financial Services has amended and renamed New York Insurance Regulation 187, which will now be called “Suitability and Best Interests in Life Insurance and Annuity Transactions.”  The Amended Regulation addresses the duties and obligations of insurers and insurance producers and provides that any transaction with respect to life insurance policies and annuity contracts delivered or issued for delivery in New York must be in the best interest of the consumer and appropriately address the
Continue Reading New York Amends Regulation 187 (now called “Suitability and Best Interests in Life Insurance and Annuity Transactions”)

Blockchain in the Insurance Industry Series: Part I
Although it is being touted as one of the most important innovations since creation of the Internet, most people only know blockchain as the technology supporting Bitcoin and other cryptocurrencies. However,  there are a myriad of potential uses of blockchain technology in the insurance industry. To fully appreciate the full potential of blockchain in the insurance industry a basic understanding of the technology is helpful.
Blockchain is a type of distributed ledger technology (or decentralized database) that maintains records of digital transactions.  Rather than having a central administrator like a traditional database
Continue Reading What Is Blockchain Technology?

Joining a majority of states, Pennsylvania recently enacted a “de minimis exception” to its rebating and inducement laws. Pennsylvania law generally prohibits providing policyholders any valuable consideration or inducement which is not specified in the contract of insurance. However, Pennsylvania’s new de minimis exception permits producers and insurers to spend as much as $100 annually on an insured or potential insured to market insurance so long as the offer is not contingent on the purchase of insurance and does not constitute “money.” This new law is effective July 3, 2018.
Saul Ewing Arnstein & Lehr attorneys discuss in this alert.
Continue Reading Pennsylvania Enacts Exception To Rebating / Inducement Laws

According to the U.S. Census Bureau, millennials are now the largest living generation.  As the generational makeup of customer bases evolve, so too do customer expectations in how they apply for and obtain insurance.  Emerging technologies are revolutionizing traditional business models used in the insurance industry to stay aligned with the rapid pace of evolving customer expectations.  These advancements come at a critical time for life insurers, who have seen the market for life insurance decrease in recent years.
While the initial focus of InsurTech activity was concentrated in health and auto insurance markets, there has been a surge in
Continue Reading InsurTech Innovations in Life Insurance: Reaching the Largest Living Generation

As InsurTech startup companies continue to enter the marketplace, one innovative concept that has gained considerable momentum in the international insurance market is peer-to-peer insurance.  Often powered by InsurTech, peer-to-peer insurance companies take a different approach to risk pooling. 
Under the traditional insurance model, insurers collect premiums from a large pool of policyholders, usually strangers, and then an underwriter uses profile information from the policyholders to create a risk analysis and adjusts premiums accordingly. Information such as age, medical history, hobbies, and accident history are used to determine the premium that each policyholder pays.  Profits and losses from underwriting under
Continue Reading InsurTech and Peer-To-Peer Insurance

The NAIC adopted the Corporate Governance Annual Disclosure Model Act and corresponding Model Regulations (“CGAD”) in late 2014 with the intent that the filing requirement would be effective in 2016. Shortly thereafter, the NAIC’s Corporate Governance Working Group proposed that CGAD be added as an accreditation standard. Despite these actions in 2014, state legislatures have been relatively slow in enacting CGAD as compared to other NAIC initiatives that arose from its Solvency Modernization Initiative (fewer than 10 states adopted CGAD in time to have a 2016 filing date; currently 21 states have adopted or introduced the CGAD filing requirement). Indeed,
Continue Reading Corporate Governance Annual Disclosure: Expect More State Action in 2018

Five Things Insurers, Producers and Other Licensees Should Know About the NAIC Insurance Data Security Model Law
In the final quarter of 2017, the NAIC adopted the Insurance Data Security Model Law, making it available for consideration and adoption by the states in 2018. Some states, including South Carolina and Vermont, have already indicated their intent to include the Model Law on their 2018 legislative calendars.
The Model Law closely tracks New York’s Cybersecurity Regulation. In fact, in a drafting note, the Model Law makes clear that if a Licensee is in compliance with the New York Cybersecurity Regulation, it
Continue Reading Five Things Insurers, Producers and Other Licensees Should Know About the NAIC Insurance Data Security Model Law

Depending on your perspective, InsurTech is either a disruptive force or a remarkable opportunity. As traditional brick-and-mortar retail companies struggle to compete with online retailers such as Amazon, many wonder if InsurTech will usher in a similar change in the insurance industry. Disruptive…
Continue Reading InsurTech and the Changing Distribution Model – Five Insurance Regulatory Considerations