Apr 7, 2025

Milliman experts highlight challenges and solutions for insurers navigating state-by-state approvals and leveraging predictive analytics for growth. Predictive analytics has transformed the insurance industry, offering insurers—and particularly InsurTech startups, unprecedented opportunities to innovate. However, regulatory complexities bring significant challenges for startups aiming to scale their operations. “Regulatory risk creates uncertainty,” explains Peggy Brinkman, Principal & Consulting Actuary at Milliman (San Francisco, Calif.), and Chief Operating Officer of Milliman Appleseed (Seattle), a regulatory submission advisory organization. “The filing process can be lengthy and unpredictable, impacting the rollout of new models and products.” Navigating Regulatory Complexity Sue Klein, Principal & Consulting Actuary, Milliman. One of the most pressing issues for InsurTechs is the variability in state regulations. Each state has unique requirements for filings, forms, and checklists, which can lead to delays or rejections. “Some states are more demanding than others,” notes Sue Klein, Principal & Consulting Actuary at Milliman, and Chief Actuary Officer, Milliman Appleseed. “InsurTechs need expertise not only to submit filings but also to ensure compliance with evolving standards like artificial intelligence bias or new data requirements.” For instance, Massachusetts recently introduced a four-part instruction guide for filing acceptability, while states like Idaho now require domiciliary state approval before submissions. These shifting rules demand constant vigilance and adaptability. The Role of Advisory Organizations Many insurers are partnering with advisory organizations to file rating factors or loss costs on behalf of subscribers, reducing regulatory risk and expediting approvals. “It’s a shortcut that allows companies to avoid setting up their own legal entities and managing annual licensing requirements,” Brinkman explains. Some startup insurers decide to form their own advisory organization. However, this requires substantial expertise and resources to meet National Association of Insurance Commissioners (NAIC) standards while tailoring models for individual states. “Not every startup has the appetite or capacity for this level of complexity,” Klein adds. Predictive Analytics as a Growth Driver Peggy Brinkman, Principal & Consulting Actuary, Milliman. Predictive analytics has become indispensable for insurers aiming to refine pricing models and improve underwriting efficiency. Advisory organizations help companies identify risk drivers and optimize decision-making processes using granular data. “Actuaries have adapted their skillsets to manipulate atomic-level data for predictive modeling ,” Brinkman says. These advancements enable insurers to reduce loss ratios, improve operating efficiency, and enhance customer satisfaction. Despite its potential, implementing predictive analytics comes with challenges such as data quality issues and legacy system limitations. Also, regulatory scrutiny around AI-driven models raises concerns about bias and compliance risks. Regulatory Approval for Analytics Models Milliman Appleseed’s work with InsurTechs showcases the transformative impact of predictive analytics. For managing general agents (MGAs), adopting pre-approved models has accelerated program launches while reducing costs. “These models lend credibility,” Brinkman says. “When a model is reviewed by multiple states, it reassures our clients that they won’t face regulatory pushback.” Startups like Cambridge Mobile Telematics (Boston) have successfully navigated these challenges by leveraging advisory organizations and predictive modeling expertise. Also, Milliman Appleseed’s partnerships with MGAs have enabled faster scaling through turnkey solutions tailored to regulatory requirements. Building Relationships with Regulators Strong relationships with state regulators are pivotal in overcoming filing obstacles. Klein emphasizes the importance of direct communication: “It’s important to have contacts in states with demanding approval processes who can expedite approvals or clarify objections.” This proactive approach mitigates delays caused by miscommunications or incomplete submissions. Brinkman highlights the satisfaction of bridging knowledge gaps between insurers and regulators: “Teachable moments where we elevate understanding on both sides are rewarding—they pave the way for smoother interactions in future filings.” Advisory Services and Regulatory Filing Success InsurTechs stand at the forefront of innovation in insurance but must navigate a labyrinth of regulatory challenges to realize their full potential. By leveraging advisory organizations, predictive analytics expertise, and strong regulator relationships, startups can overcome barriers while driving growth. Klein summarizes: “When you get a filing approved in a state with complex requirements, it’s a feel-good moment for everyone involved.” Tom Benton // Tom Benton is a recognized thought leader in the insurance industry, with over 20 years of experience driving IT strategy and innovation. As a former insurance CIO and consultant, Tom has worked with insurers and technology providers to develop and implement strategic plans that improve customer experience, reduce risks, and enhance operational efficiency. He leverages his expertise in IT capability assessment, transformation preparedness, and solution provider evaluation to help organizations align their technology strategies with emerging industry needs and trends.Tom was most recently a Partner at ReSource Pro, formerly known as Strategy Meets Action. Tom also served as Vice President of Research and Consulting at Novarica and as Chief Information Officer at Navy Mutual, as well as CIO and CTO for major nonprofit organizations in Washington, DC. Tom holds a master's degree from MIT and a bachelor's degree from Cornell University, and he has contributed to numerous industry reports, publications, and webinars. His passion lies in helping insurers and insuretechs embrace innovative solutions for long-term success in a rapidly evolving market. Leave a Comment