North Carolina lawmakers hope a bill that creates a “regulatory sandbox” will spur innovation in the insurance and financial sectors in the state, particularly in the use of blockchain technology.
The North Carolina House last week unanimously approved House Bill 624, sending it to the governor for his signature. The bill would allow companies to offer trials of financial or insurance products, without being subject to some licensing and other regulatory requirements. The measure is similar to ones approved in five other states in the last three years, according to local news reports.
“The idea originated in the United Kingdom in 2014 specifically for financial tech companies,” said Jon Sanders, a senior fellow at the John Locke Foundation. “By 2018 it was considered a huge success, and regulatory sandboxes started cropping up around the world.”
The bill, if signed into law by Gov. Roy Cooper, would apply only to the insurance and finance industries. An Innovation Council created by the bill would review applications. The council would include the state insurance commissioner, secretary of state and other state officials. Companies selected would be authorized to offer, for at least two years, an innovative product or service that uses technology to address a problem, provide a benefit or create something novel in the state.
The insurance commissioner would then oversee the insurance-related applicant’s work and would have authority to grant an “innovation waiver” of statutory or regulatory requirements that do not currently permit the product or service to be offered to consumers, a legislative analysis of the measure explains.
The bill mentions the use of insuretech, fintech and blockchain technology, which is used in cyber currency and has been discussed for insurance certificates of coverage. The internet-based system creates a unique record that cannot be faked or duplicated, advocates say.
A similar effort to create a sandbox in North Carolina stalled in 2019.