What is the biggest barrier to creating a new, innovative product in your insurance company? A scarcity of technological resources? Insufficient market knowledge? A deficit of talented personnel?
Or is it that invisible but solid wall called “regulatory compliance”?
In our experience, in most cases, the answer is the last one. Company leaders want innovation, product teams are full of ideas, but the entire organization is frozen by the fear that every new, bold step could set off a regulatory landmine.
This is the main dilemma of the modern insurance business: how to create innovation in an industry where the rules are constantly changing and safety is paramount.
The Diagnosis: What Slows Down Innovation in the Insurance Sector?
- Legacy Products and Rigid Policies: Insurance products are built on policy terms and conditions that were approved decades ago. Any new, innovative idea (like on-demand insurance) doesn’t fit into these old boxes and requires the long process of creating and approving new legal language.
- A Data-Phobic Culture: New digital products are based on data (telematics, information from health-monitoring wearables, etc.). Traditional compliance departments are trained to see any new type of data primarily as a risk (privacy, security) rather than an opportunity (better pricing, personalized products).
- Reactive, Checklist-Based Compliance: Compliance teams often work from a “checklist” of existing rules. If an innovation (like AI-based claims assessment) is not on their list, their default response is “it’s impossible,” because there is no established practice or regulatory guidance for it.
- Siloed Knowledge: The people who understand the regulations (Compliance) and the people who understand the technology and the customer (the Product team) do not speak the same language and do not collaborate effectively.
From Defense to Offense: Our Model for Turning Regulation into a Competitive Advantage
Our approach is based on the idea that regulation should be transformed from a reactive barrier into a proactive, strategic tool.
Step 1: Proactive Regulatory Scanning and an “Innovation Sandbox”
Instead of waiting for a new regulation to hit them, we help companies create a proactive function. This involves not only monitoring existing rules but also constantly analyzing upcoming regulations and global Insurtech trends. We create an internal Regulatory Sandbox, where the company can pilot a new product (e.g., “pay-as-you-drive”) with a small segment of customers in close partnership with the regulator. This allows the company to gather data, assess risks, and participate in creating the new “rules of the game” for this type of product themselves.
Step 2: Modular Product Design and Dynamic Policy Generation
To solve the problem of rigid policies, we introduce a modular approach. We work with legal, underwriting, and IT teams to break down monolithic insurance policies into smaller, pre-approved modules or “clauses.” For example, a “theft coverage module,” a “third-party liability module,” etc. Then, we implement a dynamic policy generation system. When creating a new, personalized product, the system assembles it from these pre-approved legal blocks. This dramatically reduces the time needed for legal review and approval for every new product variation.
Step 3: Building an Ethical AI and Data Governance Framework
To overcome the fear of data, we help the company move from a position of fear to one of responsible control. We facilitate the creation of a cross-functional Data Governance Council (including representatives from Compliance, IT, and Business) that develops clear internal rules for working with new types of data. This framework answers questions like: What data can we collect? How must it be anonymized and secured? How can we use it for pricing in a non-discriminatory way? This framework gives product teams clear “rules of the road” for using data and turns a vague risk into a managed asset.
Step 4: An Internal “Compliance-as-a-Service” for Product Teams
This is a cultural and operational shift where the compliance department transforms from a gatekeeper into an internal consulting service. We help restructure the compliance function so that they offer consultations, training, and self-service tools (like a digital compliance library) to product teams. Their goal becomes to help the business move as quickly and as safely as possible. They are measured not only by the fines they have avoided but also by the speed at which compliant products get to market.
In Conclusion
In the new era of insurance, regulation is not just a hurdle; it is part of the product itself. Companies that treat it as a defensive, formal obligation will always be slow. The companies that learn to proactively manage regulation, integrate it into their product design, and use it to build customer trust will always be the winners. We help you change your relationship with regulation and turn it into your competitive advantage.
