One of the main issues Libertas focused on during this year’s legislative session was tackling government over-regulation. We’ve been encouraging legislators and regulators to adopt something called a “regulatory sandbox” in certain industries.
A regulatory sandbox is a different legal approach to regulating businesses that allows entrepreneurs to test their innovations under a regulator’s lighter oversight.
Last year, Utah established a sandbox for the financial technology industry and the Utah courts announced intentions to create a legal services sandbox.
This year, Representative Adam Robertson proposed a new sandbox for insurance products and services.
The insurance industry is riddled with high barriers of entry and is lethargic to change. This makes the industry ripe for innovation. Rather than shutting down innovative products and companies, trying to fit a square peg in a round hole, the insurance sandbox proposed in House Bill 402 offers the opportunity for companies to offer unique goods and services in the marketplace that may not be allowed due to current laws in place.
- Allows a company to offer its product or service in a controlled environment for up to two years.
- Requires the company provides a lot of transparency for the consumer, in an effort to make sure they are informed on the services they are exploring.
- Provides controls for entry and exit from the sandbox, so consumers are not left high and dry.
If all goes well, it offers a path for that company to become legitimate in the open market. And it provides guidance for the insurance department as to what regulations may be unneeded and what laws may have to be addressed.
This sandbox is not just for new companies. It also allows existing players in the insurance industry an opportunity to try and innovate in this space. It will be very interesting to see what kinds of cool ideas and services these different players come up with.
The ultimate winner of this sandbox? Utahns! They will be the beneficiaries of the new goods and services they have access to as well as hopefully lower prices for insurance products.
To learn more about regulatory sandboxes, be sure to read our policy brief.