Experts say North Carolina will be on the vanguard of emerging technologies in the insurance and financial products sector if a bill that has passed both chambers of the General Assembly becomes law.
House Bill 624 got the OK from the N.C. House on Wednesday, June 16, in a 103-2 vote. The bill would establish a “regulatory sandbox” — similar to one created in Arizona in 2018 — that would waive certain regulatory obstacles for a trial period for fast-emerging products and services.
“Knowing that North Carolina and the leaders of our General Assembly recognize the power of innovation, the importance of being business-friendly and nimble, and the relevance of having an Innovation Sandbox approach makes me feel very bullish for the future of the Old North State,” said Tariq Bokhari, founder of the Carolina Fintech Hub and a member of the Charlotte City Council. “From this point forward, innovation will be a part of everyone’s job.”
H.B. 624 is similar to another version — Senate Bill 470 — passed by the Senate on June 14 in a unanimous 47-0 vote.
Differences between the two bills must now be ironed out in a conference committee before a final version is sent to Gov. Roy Cooper for his signature.
Both bills would create a new Innovation Council to market the program and seek and review applications. The council would evaluate applications based on level of innovation, potential consumer risks, the level of consumer protections and complaint resolutions in place, and level of business plan and capital. It would then make recommendations and pass them along to the state agencies ultimately responsible for the final decision.
“We believe that this is an incredibly forward-looking piece of legislation that recognizes the coming growth in the fintech industry,” said Jordan Roberts, government affairs associate for the John Locke Foundation. “It also recognizes that often government regulation moves slower than the innovation in the private sector.”
Civitas Action graded S.B. 470 a “yes” vote in a recent press release.
“The technology, banking, and insurance sectors illustrate how quickly government regulations can fall behind the fast-paced speed of innovation. A Regulatory Sandbox would allow companies the breadth to create new technologies without fear of running afoul of state regulations. From there, state legislators could make informed decisions about the need for regulation, when applicable.”
“The world is rapidly changing all around us,” Bokhari said. “Technology is disrupting the business models that have fueled the last century of growth across the globe. Being able to innovate at a greater pace than everyone else will be the great measuring stick over the next century, and the tough truth is there will have to be winners and losers.”