The Pelican State, a state known for its delicious food and diverse culture, just made a strong move in innovation.
After four years of effort, in 2024, Representative Kim Carver introduced House Bill 701, which established an insurance sandbox – the state’s first.
What Regulatory Sandboxes Do
A regulatory sandbox allows businesses – under the observation of regulators – to develop and offer new products, services, and business models while receiving a temporary waiver from regulations inapplicable to their innovative ideas.
The sandbox:
- Allows a company to temporarily offer its products and services in a controlled environment for up to six years;
- Requires that a company remain transparent to consumers to inform them of the services they’re exploring;
- Provides a process for entering and exiting the sandbox so consumers aren’t left high and dry;
- And establishes the insurance sandbox in the Louisiana Department of Insurance.
If the trial is successful, the sandbox offers a path forward for the company to legitimately enter the open market while also providing guidance to the insurance department and state legislature on which regulations require reform or even repeal.
The sandbox doesn’t just benefit new companies, but also existing ones
By providing businesses – both big and small, old and new – the opportunity to innovate in the insurance space, it’ll be interesting to see what the “next big thing” will come as a result of Louisiana’s insurance sandbox.
The Pelican Institute proved instrumental in getting H.B. 701 through the Louisiana State Legislature, which had overwhelming support, before receiving Governor Jeff Landry’s signature. Louisiana now joins fourteen other states that have created sandboxes of their own, not including Nevada’s financial technologies (fintech) sandbox that sunsetted in December 2022.
Regulatory sandboxes are an issue that Libertas has researched extensively and we stand ready to help any state pursue this reform opportunity as we have with Louisiana. For groups or legislators in other states looking to work on the issue, we’d love to help.
