Nov 22, 2019

New Hampshire Legislature preparing to consider regulatory sandbox

Highlights:

• Insurance regulatory sandbox program would allow companies to apply for letter of no-enforcement pursuant to specific law or regulation
• Intended to encourage innovation of new products in the state
• Any company issuing an insurance policy would be required to have appropriate certification of authority

Ahead of the 2020 legislative session, the New Hampshire Senate has received a request to establish an insurance regulatory sandbox program in the state. This program would allow the New Hampshire commissioner of insurance to provide certain companies with a no-enforcement action letter, which would allow the company to test an insurance product in New Hampshire without threat of enforcement of specific laws or regulations. Companies would need to apply for a letter, which would be granted on a case-by-case basis for a limited time.

Several states have begun to pass regulatory sandbox programs intended to allow innovative development that may not fully comply with existing laws. As proposed the New Hampshire program would require an applicant to explain how the product would benefit consumers, not pose a risk of harm to consumers, be economically viable for the company. The applicants also would need to show the New Hampshire insurance commissioner the financial stability of their companies by proffering the balance sheet, statement of loss, and statement of changes in shareholder equity. Due to the experimental nature of the program, an applicant must propose a testing plan during the duration of the no-action letter. The plan would need to include a proposal to obtain the necessary licenses and authorizations following the conclusion of the testing period or for protecting consumers should the test fail.

The state’s insurance commissioner would be responsible for reviewing each application and assigning a specific timeline in which a company would need to run its testing period.

While a no-action letter would offer a company protections from specific laws or regulations, it would not free an applicant from New Hampshire’s required licenses or authorizations. Notably, the insurer of any policy still would need a valid certificate of authority prior to issuing an insurance policy. 

Several states have established similar insurance regulatory sandbox programs this year, including Vermont. These programs have not been in existence long enough to know what laws or statutes a company may cite as impeding its innovation. As proposed in New Hampshire, the insurance commissioner would need to publicly announce any approved registrations for the regulatory sandbox program and the parameters of the no-action letter. This would allow the industry to follow any successful applications in New Hampshire.

This is just one of the legislative/regulatory changes that the state will consider in the upcoming legislative session. For more information on the Legislature’s upcoming agenda, see the related PIAdvocacy blog.