North Dakota’s insurance commissioner is bullish on the technological innovations that are occurring within the insurance industry and wants his state to be in the forefront of experimenting with and testing new insurance products and developments.
Though in terms of population — 757,952 in 2016 according to the U.S. Census Bureau — North Dakota is a small state, Insurance Commissioner Jon Godfread thinks that may be an advantage.
“As a smaller state, we are ripe for some pilot projects,” Godfread said in an interview with Insurance Journal. When it comes to innovation and technology in the insurance industry, “we’re ready and willing to have those discussions,” he said.
A member of the National Association of Insurance Commissioner’s Innovation and Technology Task Force, Godfread thinks it’s a great time to be in the insurance industry because of the changes taking place.
The NAIC’s 27-member task force was formed earlier this year with the goal of assessing the impact of new technologies on the insurance marketplace and exploring how and whether those developments benefit consumers, the industry and regulators.
“I’m really excited about the NAIC’s drive into innovation and technologies,” Godfread said. “I’m excited to see them working on this technology piece and the innovation piece, because I think oftentimes, regulators are looked at as roadblocks through a lot of this.”
Godfread said he and many of his colleagues in other states are open to exploring the technological possibilities in the industry.
“It just depends on whether or not the companies are able to implement that technology or use that technology in a meaningful way,” he said. “It’s a balance that we’re trying to strike between making sure we’ve got the regulations in place to properly and adequately protect our consumers but also giving our companies the leeway they need to be able to make these movements work.”
He has asked his staff to “find a way to yes” when it comes to some of the new ideas and technologies being proposed because “we’re going to see a few of that come in here that makes sense and need to be implemented.”
Godfread said part of the problem with getting technological innovations accepted by regulators is that there are antiquated laws on the books that were last updated in the 1980s, when the internet was in its early stages. Those need to change state by state, and he’d like to see North Dakota be a leader on that front “because the reality is, this technology is coming and it’s going to be here to stay,” he said.
Consumer Protection a Priority
An attorney and former executive with the Greater North Dakota Chamber of Commerce, Godfread was elected as the state’s twenty-second commissioner in November 2016. He’s also a North Dakota native and sees consumer protection as the primary function of the insurance department. “That’s our main focus. Our main mission is protecting the North Dakota consumer,” he said.
Insurance company solvency monitoring, agent licensing and other insurance department activities are focused on “making sure that the people who are operating in the insurance business are qualified, are good character people; making sure the companies are able to pay the claims that they promise to their consumers. Also assisting consumers when they have issues and making sure that their insurance needs are met,” he said.
After being installed as insurance commissioner in January, Godfread made it a priority to ensure that the department is outreach- and service-focused. The department is “reaching out to our consumers to make sure that they know, one, not only what we’re here for and what we can provide, but to have this type of discussion in the public space and the public forum with our consumers,” he said.
In addition to having open meetings, and listening to consumers’ needs and complaints, it’s important to be able to compile that feedback from the public and present it to the insurance companies, he said. That way, the department can “be a voice and advocate for our consumers to the companies to say, ‘Here’s what we’re hearing. Here’s what our consumers want in our state. Here’s what we hope you can provide, which you should look at providing,’ and give the companies an opportunity to respond.”
On Climate Change and Insurance
As an insurance commissioner in an energy producing state, earlier this year Godfread joined with regulators from several other states in endorsing a letter written by Oklahoma Insurance Commissioner John Doak to California Insurance Commissioner David Jones. In the letter, Doak asked Jones to back off his Climate Risk Carbon Initiative, which calls for insurance company disclosure of investments in fossil fuel-producing companies and aims to discourage them from such investments.
Godfread followed up with his own statement asserting that Jones’ initiative is a “deeply misguided overreach.”
He added that the job of “insurance commissioners is to protect consumers and serve the greater public interest through the effective and unbiased regulation of the insurance marketplace. We are not meant to make politically-motivated decisions that alienate insurance companies and undermine our authority to credibly regulate this industry.”
In the interview with Insurance Journal, Godfread said his concern with the issue of climate change is not why, whether or how it is occurring, but with how it impacts weather patterns that ultimately affect the property and people of his state.
“With that in mind, certainly we’ve seen a change in some of our weather patterns. I think it’s important for all of our insurers to be mindful of that. I know they’re doing that,” he said. But, “as insurance regulators, it’s not necessarily our job to be micromanaging individual decisions made by companies.”
It is concerning, he said, when regulators go beyond “making sure that their companies are solvent and are able to pay their claims” and start looking into insurers’ individual investments to make “sure that they’re doing what we see is fit. I think it’s a little shortsighted. It also seems to be extremely political.”
He added that there’s a part of the story that is missing in California’s stance on energy issues and that is: there’s a “lot of the good that the energy industry is doing, especially here in my state.”
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