By R. Christopher Haines, Executive VP and Chief Operating Officer

For years, the insurance industry was slow to adopt new technology. It was no secret and not just insurance. All financial services were behind the curve when it came to technology. But in the last few years that’s changed. Many cutting edge technologies have made their way into insurance.

This change is due in large part to the overall push in technology towards innovation and the influx of the next generation of talent into the industry. But the challenge is getting all this young talent to employ all this new technology within the constraints of a highly regulated industry.

Right now, it’s like the Wild West: New technology and concepts are being introduced into the industry at a rapid pace. New models for development and deployment have been initiated. But much of this has been done with little regard for the regulations that govern the industry.

It seems we’re at a point at which technology may outpace regulation. There have been many technology moves, without corresponding responses from the regulators:

  • How do regulators really feel about policy admin systems in the public cloud? Not in a private cloud or with a hosting provider, but in the true public cloud.
  • Is it really okay for insurance companies to place their database backups in the public cloud?
  • Do regulators have a good handle on the concepts of the agile model for software development and deployment?
  • Are systems still being tested adequately before new functionality and changes are being deployed to production environments?

If you raise any of these questions, you’re likely to be labeled change-averse. Is that fair? There’s a big difference between resisting change and having a good understanding of how to operate in a regulated industry. The old hands in insurance IT have to take a role in educating the young guns and reining them in.

Regulation is not optional. This is not like the old days of the Wild West, in which laws were made up as you went along and seldom enforced. The laws that govern insurance are strict and unyielding. And a big portion of them govern IT.

All this might turn out to be a non-issue. And the old hands can learn a thing or two from the young guns. But we haven’t had any specific indications from insurance regulators that they approve or disapprove of all of these new technological options.

Many in the industry seem to think that there haven’t yet been enough large-scale failures or events to get the attention of the regulators. Let’s hope it won’t come to that.
Time will tell.