Every quarter, Locke Lord LLP and Novarica create a report and hold a webinar on new regulatory developments in analytics, the use of data, and data security that have the potential to affect insurer technology strategy.
The latest report came out last month and covers regulatory changes resulting from the pandemic, states’ best interest sales standards, and rules around third-party service providers and data privacy and security. Novarica and Locke Lord LLP will be co-hosting a webinar on these topics on July 29th (see below for details).
Pandemic-Related Regulatory Shifts
2020 has been a year of change for everyone. Insurers have had to adapt to substantial instability due to COVID-19 and recent, rapidly ongoing regulatory changes. These changes include regulatory support for digital processes like e-notarization, impacts on cancellation and premium collection deferments, use of credit scores for underwriting, mandated auto insurance premium refunds due to reduced driving, business interruption insurance coverage, workers’ comp coverage, health-care workers liability immunity, and virtual claims adjusting.
These changes could have a profound, long-term impact on insurers across lines of business. Of particular note is state regulatory agencies overturning exclusion language in business interruption and workers’ comp existing policies.
State Best Interest Sales Standards
Beyond the pandemic, emerging regulations aiming to protect consumers include best interest sales standards in annuities, data protection, and mandates for security best practices for third parties supporting insurers across lines of business.
These rules include NYS Regulation 187 (Reg 187), the SEC’s Regulation Best Interest (Reg BI), SEC’s Client Relationship Summary (CRS), and other enhancements to NAIC’s Annuity Suitability Model Regulation (Model Regulation #275). The notion of insurers and producers acting in the “best interest” of the consumer has many practical impacts on what carrier-owned broker-dealers need to do.
Data Privacy and Security and Third-Party Service Providers
New laws and regulations have also emerged over the last few years that mandate what insurers need to do to manage third-party service providers around data and security. These regulations include NY DFS Cybersecurity Regulation 23 NYCRR 500 (NY DFS Reg), the NAIC Insurance Data Protection Model Law, and various implemented versions of the NAIC model law that several states have adopted.
The joint report explores how the new laws define a third-party service provider, what types of risk must be reviewed, guidelines that insurers should adhere to and incorporate into service contracts, and some best practices around monitoring third parties.
For more on these ever-evolving trends, see Insurance Technology Strategy and Regulatory Compliance, Vol. 4 or register here and join the live webinar on July 29th.
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