Laws and regulations governing insurance would benefit from being updated alongside the insurtech revolution, sources said.
“Because of the existing legal and regulatory aspect of surplus lines, there are things the market is ready to do technologically speaking, but not able to do because it really is a somewhat outdated system of regulation,” said Daniel Maher, executive director of the New York-based Excess Line Association of New York. “Technology is ahead of what is permissible.”
Regulatory redress would fall to the states under the U.S. state-based insurance regulatory system, experts say.
“I think this is a place where the states could really play a bigger role,” said George Gorney, chief information officer of U.S. Risk Insurance Group LLC in Dallas.
Four states — Mississippi, Louisiana, Virginia and Wisconsin — have eliminated the diligent search requirement, according to Zachary Lerner, a partner in the New York office of Locke Lord LLP and a member of the law firm’s insurance and reinsurance department.
“We want to see state legislatures address this,” said Mr. Lerner. “Either modify the diligent search, or expand the statutes or have (the National Association of Insurance Commissioners) look at this so we can help refresh these diligent search requirements to allow a well-defined way to expeditiously get these (declinations), because if we don’t we’re going to hold back the surplus lines industry,” Mr. Lerner said.
