This past legislative session, Louisiana’s lawmakers sought to improve several policies contributing to the state’s dying property insurance market and leaving residents without the help they need. They moved quickly to pass a package of bills aimed at encouraging insurance companies to do more business in Louisiana, ending heavy-handed government regulations and giving insurers greater flexibility to operate and compete in a healthy market that’s good for businesses and consumers alike.

Legislation that reversed years of so-called “protections” for consumers, but in reality, did little more than to drive insurers away from the state, got the most attention, but one another bill that passed quietly through the legislative session could take Louisiana’s insurance market to the next level.

House Bill 701 by Representative Kim carver, now Act 229 after being signed into law by Governor Jeff Landry, creates a pilot “insurance regulatory sandbox” program through 2029. The sandbox allows insurers offering innovative services not typically allowed per traditional state regulations to be approved on a temporary basis with oversight from the Louisiana Department of Insurance and legislative committees.

Insurers, under the close supervision of the state, would be authorized offer new services while receiving a temporary waiver of certain regulations that are not applicable to their innovative ideas or could serve as barriers to entry.

The sandbox allows an insurer to temporarily offer its services in a controlled environment for up to three years, with an opportunity to extend. Throughout the trial period in the sandbox, insurers must abide by transparency requirements to keep consumers informed of what they are exploring and testing. If the trial is a success, the sandbox offers a path forward for the entity to legitimately enter the open market, possibly after traditional regulations are revised to make room for the innovative service on a permanent basis.

Louisiana Insurance Commissioner Tim Temple told lawmakers that the existence of such a tool sends a powerful message to insurers across the country, that Louisiana is once again open for business and open to innovation. The sandbox will motivate new and existing insurers to explore new ways of serving consumers, giving them more—and possibly better—insurance options.

The idea is based on sandbox laws passed in 14 other states and insurance regulatory sandbox laws enacted in Kentucky, North Carolina, South Dakota, Utah, Vermont, and West Virginia. Pelican released a report on sandboxes in 2022, based in part on the excellent extensive research that Libertas Institute has done on regulatory sandboxes across the United States.

Libertas explains, “Innovators across the country are often punished….would-be entrepreneurs whose way of ‘doing things differently’ is prohibited by a law or regulation written in years past. Enter the regulatory sandbox—a legal process to give a leg up for innovators who want to safely offer their product or service while the law catches up.” It’s now up to Louisiana’s insurance leaders and creative providers to take full advantage of the opportunity.