Shawn Hanson Quoted by Law360 on Insurtech and AI, Blockchain Challenges

For its article “AI, Blockchain Pose Regulatory Issues For Insurtech Firms” on insurance technology, or “insurtech,” and the insurance industry’s attempts to deploy artificial intelligence (AI) and blockchain technologies, Law360 quoted Akin Gump litigation partner Shawn Hanson on the challenges facing the industry.

Hanson noted, regarding automated underwriting systems, “In some states, for some lines of business, you are permitted to generate a rate based on certain characteristics such as sex or genetic information, while in others, you are forbidden from doing so. Having to satisfy all 50 states in a digital world will be a real cutting-edge challenge for these insurtech businesses.”

Regarding the use of blockchain and AI technologies to process claims, he noted that insurance company claims handlers must be licensed by the states in which they work and asked, “If you have a blockchain and a smart contract and a fully automated claims decision, who is that person? Are you violating the licensing statutes with that kind of arrangement?”

Hanson said one answer for carriers looking to implement smart contracts might be to designate a licensed claims handling professional within the company to develop the automated claims administration system and respond to regulators’ questions.

He concluded, “The overarching lesson here is that insurtech companies have to consider potential regulatory issues on the very front end, not after the fact.”