West Virginia’s potential game-changer
As a former insurance regulator, I can tell you that regulators are risk averse. It’s the true actuary in them perhaps. And for insurance commissioners, the political environment in which they must navigate at times, discourages inner leadership and creative innovation. Yet we must remember that our insurance departments are also charged with ensuring a competitive marketplace. And that involves more than actuarial formulas. Regulators and lawmakers in West Virginia get that.
The West Virginia Legislature has enacted House Bill 2221 signed by the Governor, which establishes a process in which a person or entity may apply to the Insurance Commissioner to introduce and utilize an insurance innovation on a trial basis that would otherwise conflict with current applicable law.
Applicants pay a $750 fee, explain how the innovation will add value to customers and serve the public interest, be economically viable for the applicant, and provide suitable consumer protection, while posing no unreasonable risk of consumer harm. They also have to explain how statutory and regulatory issues prevent the innovation from currently being used in the marketplace.
“Innovation” means any product, process, method, or procedure relating to the sale, solicitation, negotiation, fulfilment, administration, or use of any product or service regulated by the commissioner:
- That has not been used, sold, licensed, or otherwise made available in this state before the filing date of the application, whether or not the product or service is marketed or sold directly to consumers; and
- That has regulatory and statutory barriers that prevent its use, sale, license, or availability within this state.
The insurance commissioner then evaluates the request to determine if it adequately satisfies the requirements set forth in the code. If so, the commissioner issues a “Limited no-action letter” or “limited letter” setting forth the conditions of a beta test and establishes a safe harbor under which the commissioner will not take any administrative or regulatory action against a participant or client of the participant concerning the compliance of the insurance innovation with West Virginia law so long as the participant or client abides by the terms and conditions established in the limited no-action letter.
Sounds pretty simple and straightforward, doesn’t it? Sometimes the best ideas are! We salute West Virginia Insurance Commissioner James Dodrill and the Legislature for their willingness to open up the market for innovative ideas.
LMA Newsletter of 5-17-21