Hawaii Insurance Commissioner Gordon Ito has seen the future, and it includes insurtech sandboxes in the Aloha State.
Ito, who has testified before state legislative committees in favor of bills that would create a sandbox, says realizing the sandbox concept would bring economic benefits to the state.
“It could create growth in our tech sector by attracting innovators to work with insurance companies in Hawaii,” Ito says, “as well as encourage insurers outside of the state to use Hawaii’s sandbox to test innovations for use in the United States or Asia.”
He says technological advancements in mobile platforms, artificial intelligence, data collection, storage and the “continuing transformation in our economy are factors that attracted our interest in creating a sandbox in Hawaii to encourage innovation in the insurance sector. Hawaii’s unique location could result in the state becoming an insurtech center that facilitates collaboration between tech innovators, insurers and even other insurtech countries that are already fostering innovation.”
Ito points out that Hawaii has built a reputation as an insurance regulatory innovator. “Back in 1986, Hawaii was one of the first states to adopt captive laws, resulting in the state’s becoming one of the premier captive domiciles in the world,” he says. If the current legislation becomes law, “Hawaii would be the first state to pass a law specifically dedicated to creating an insurtech environment.”
Not surprisingly, Ito does not share the concern of some sandbox supporters that state-based regulation stifles innovation such as sandboxes. “The state-based system does encourage innovation,” he says.
He says states will either pass insurtech laws or will work within their own frameworks and provide flexibility by granting exceptions. He believes the insurance and technology sectors will work together to create efficiencies and new products, underwriting processes, and sales and payment methods. The blending of insurance, technology and other sectors will also occur.
“Insurtech or regulatory flexibility will be the rule and adopted in many states rather than the exception,” Ito says.
Carrier legacy systems, he says, need to be replaced. “Attracting tech companies to work with insurers in not only upgrading existing systems but implementing entirely new processes is an example of the talent and technology that could bolster the insurance sector,” Ito says.
“There is an infinite number of possibilities, which could benefit consumers by creating more choices and improving efficiencies in the insurance area,” Ito says. “They are already evident in other sectors of the economy. The U.S. is a technology leader and has the largest insurance market in the world. Changes are constantly happening in both worlds. It’s exciting times in the insurance and technology areas."