NAIC holds inaugural meeting of the E-Commerce Working Group

The newly formed E-Commerce (EX) Working Group held its inaugural meeting on June 30.  As highlighted during the meeting, the nation’s abrupt move to remote working for many and touchless interactions to the extent possible highlighted the myriad ways in which insurance laws and regulations remain tied to paper, pen and in-person interactions.  The group, led by Kathleen Birrane, Maryland Insurance Commissioner, was recently established to determine whether there are positive lessons to be learned from our collective pandemic experiences. 

On the call, NAIC staff and Commissioner Birrane described the genesis of the working group and highlighted its goals.  In sum, this working group stems from the recognition among regulators and the industry that there may be substantial utility to maintaining or adopting on a permanent basis many of the emergency orders or rules established early in the pandemic. In late 2020, the Innovation and Technology (EX) Task Force circulated a request for information asking stakeholders to identify “specific ‘regulatory relief’ or ‘regulatory accommodations’ offered by states as a result of the COVID-19 pandemic, that [they] would recommend be continued or made permanent, related to innovation and technology.”  A subsequent request for information was published in March 2021 and during the Spring 2021 national meeting, the Innovation and Technology (EX) Task Force created this working group.  The goal of the working group, as expressed in its charge, is to:  “Examine e-commerce laws and regulations; survey states regarding federal Uniform Electronic Transactions Act (UETA) exceptions; and work toward meaningful, unified recommendations.”

Commissioner Birrane and others made it clear that the group’s focus will be on identifying those regulatory hurdles that manage to cost time and money to comply with and provide little or no consumer protection.  For instance, requirements that the jurat pages of annual financial statements be physically signed rather than electronically signed or mailing requirements for documents that the customer has already agreed to receive electronically.  Commissioner Birrane will keep the focus on identifying the “low hanging fruit” that can be addressed most readily and for which practical solutions can be identified.

Importantly, although the lessons learned during the pandemic may have been the impetus for organizing the working group, the objectives of the group appear to be broader than just making permanent those temporary adjustments that were made during the pandemic.  Instead, the working group hopes to apply those lessons to other regulatory processes and requirements that can be improved through the use of e-commerce techniques.

In the brief discussion that followed, Birny Birnbaum from the Center for Economic Justice and an NAIC designated consumer representative, sounded a note of caution.  He agreed with the overall purpose of the working group but asked that the members be cognizant of the dangers in cyberspace.  In particular, Mr. Birnbaum noted that “dark patterns” – techniques for tricking individuals into taking certain activities online – are a significant threat to consumers and that regulators must be on guard for misconduct as the industry moves into a more digitized world.

Following the themes outlined by Commissioner Birrane, the working group will focus on UETA with the goal of identifying how to best align regulatory requirements for the insurance industry with UETA’s standards and practices.  The working group’s first step will be attempting to scope the issue by identifying the legal framework regarding electronic transactions in the 56 jurisdictions.  Once the working group has a sufficient understanding of the legal landscape it can turn to recommendations for change.

The working group plans to meet at the Summer 2021 National Meeting and it is likely that the group’s ultimate work product will be some sort of bulletin rather than a model law or regulation.