The District of Columbia (DC) Department of Insurance, Securities and Banking (DISB) will create a financial services regulatory sandbox, which is set to include captives, according to DISB Commissioner Karima Woods.
Woods explained that the initiative will be “instrumental in rethinking the way captives can be used to reshape commercial insurance, by eliminating inefficiencies, reducing costs, analysing data and improving underwriting and pricing decisions”.
The DISB has called for input from innovators and industry experts to assist them in ensuring that the DC’s legislation will be “capable of accommodating entrepreneurs interested in fintech, insurtech and regtech”.
The District of Columbia Financial Services Regulatory Sandbox and Innovation Council is in charge of the initiative. The membership of the council is a cross-section of professionals from the insurance, securities, captive insurance and banking industries; the technology industry; financial services regulatory professionals; and consumers representatives.
The council will issue a report on the feasibility of establishing a sandbox. In addition, it will and will review and help to administer the initiative.
The DISB explained: “By fostering innovation and allowing new products and services to come to market, a sandbox can benefit consumers by increasing choice and reducing costs. This is especially important for consumers traditionally underserved by current financial services.”
“Technology innovations can lead to more affordable products and services, new distribution channels that reach excluded groups, operational efficiencies that make it possible to serve low-margin customers profitably, and better compliance and risk-management approaches,” DISB added.
Speaking to Captive Insurance Times, Woods said DC’s biggest opportunity lies in figuring out how to harness the potential of blockchain, smart contracts, artificial intelligence and machine learning, and other innovative technology in the insurance industry.
DC will be following in the steps of the State of Arizona, which was the first US jurisdiction to create a regulatory sandbox.
The DISB has its suggestions section open until 19 January 2021.
Find out more about the District of Columbia’s captive market in the next issue of Captive Insurance Times.
