(1) The department shall create and administer a regulatory sandbox program that enables a person to obtain limited access to the market in the state to test an innovative insurance product or service without obtaining a license or without regard to other provisions of Chapter 44 or rules and regulations adopted and promulgated by the department which may be applicable, as determined by the department.

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(2) In administering the regulatory sandbox, the department:

(a) Shall consult with each applicable agency;

(b) May enter into agreements with or follow the best practices of the Consumer Financial Protection Bureau or other states that are administering similar programs; and

(c) May not approve participation in the regulatory sandbox by an applicant or any other participant who has been convicted of, or pled guilty or nolo contendere to, a serious crime:

(i) Involving theft, fraud, or dishonesty; or

(ii) That bears a substantial relationship to the applicant’s or participant’s ability to safely or competently participate in the regulatory sandbox.

(3) An applicant for the regulatory sandbox shall submit an application to the department in a form and manner prescribed by the department. The application shall:

(a) Include a nonrefundable application fee of two hundred fifty dollars;

(b) Demonstrate the applicant is subject to the jurisdiction of the state;

(c) Demonstrate the applicant has established a physical or virtual location that is adequately accessible to the department from which testing will be developed and performed and where all required records, documents, and data will be maintained;

(d) Contain relevant personal and contact information for the application, including legal names, addresses, telephone numbers, email addresses, website addresses, and other information required by the department;

(e) Disclose any criminal conviction of the applicant or officers, directors, or other participating personnel, if any;

(f) Demonstrate that the applicant has the necessary personnel, financial and technical expertise, access to capital, and developed plans to test, monitor, and assess the innovative insurance product or service;

(g) Contain a description of the innovative insurance product or service to be tested, including statements regarding the following:

(i) How the innovative insurance product or service is subject to licensing or other authorization requirements outside of the regulatory sandbox, including a specific list of all state laws, regulations, and licensing or other requirements that the applicant is seeking to have waived during the testing period;

(ii) How the innovative insurance product or service would benefit consumers;

(iii) How the innovative insurance product or service is different from other insurance products or services available in the state;

(iv) What risks may confront consumers that use or purchase the innovative insurance product or service;

(v) How participating in the regulatory sandbox would enable a successful test of the innovative insurance product or service;

(vi) A description of how the applicant will perform ongoing duties after the test; and

(vii) How the applicant will end the test and protect consumers if the test fails, including providing evidence of sufficient liability coverage and financial reserves to protect consumers and to protect against insolvency by the applicant; and

(h) Provide any other required information as determined by the department.

(4) An applicant shall file a separate application for each innovative insurance product or service the applicant wants to test.

(5) The following items shall not be waived as part of any applicant’s participation in the regulatory sandbox:

(a) Laws and regulations not under the jurisdiction of the Director of Insurance;

(b) Any law or regulation required for the department to maintain accreditation by the National Association of Insurance Commissioners;

(c) Laws regarding minimum paid-in capital or surplus required to be possessed or maintained by an insurer or product reserving laws;

(d) The Unfair Insurance Trade Practices Act and the Unfair Insurance Claims Settlement Practices Act;

(e) Any requirement for insurance producers to be licensed; and

(f) The application of any taxes or fees.

(6) After an application is filed and before approving the application, the department may seek any additional information from the applicant that the department determines is necessary.

(7) Subject to subsection (8) of this section, not later than ninety days after the day on which a complete application is received by the department, the department shall inform the applicant as to whether the application is approved for entry into the regulatory sandbox.

(8) The department and an applicant may mutually agree to extend the ninety-day timeline described in subsection (7) of this section.

(9) In reviewing an application under this section, the department shall consult with, and get approval from, each applicable agency before admitting an applicant into the regulatory sandbox. The consultation with an applicable agency may include seeking information about:

(a) Whether the applicable agency has previously issued a license or other authorization to the applicant;

(b) Whether the applicable agency has previously investigated, sanctioned, or pursued legal action against the applicant;

(c) Whether the applicant could obtain a license or other authorization from the applicable agency after exiting the regulatory sandbox; and

(d) Whether certain licensure or other regulations should not be waived even if the applicant is accepted into the regulatory sandbox.

(10) In reviewing an application under this section, the department shall also consider whether a competitor to the applicant is or has been a sandbox participant and weigh that as a factor in determining whether to allow the applicant to also become a sandbox participant.

(11) If the department and each applicable agency approve admitting an applicant into the regulatory sandbox, an applicant may become a sandbox participant. Applicants that become sandbox participants shall incur a participation fee set by the department. The participation fee shall be commensurate with the costs incurred by the department in administering the applicant’s participation in the regulatory sandbox. Participation fees shall be dependent on factors such as the size of the applicant and the number of customers the applicant may have, but shall be set at a reasonable amount to encourage participation in the regulatory sandbox.

(12) The department may enter into agreements with other states that have enacted laws that are substantially similar to the Insurance Regulatory Sandbox Act in order to advance the purposes of the act and to facilitate the consideration of applications for participation in the regulatory sandbox from persons that have satisfied the requirements of this section and received approval for participation in similar programs in other states.

(13) The department may deny any application submitted under this section, for any reason, at the department’s discretion.

(14) If the department denies an application submitted under this section, the department shall provide to the applicant a written description of the reasons for the denial.

(15) Documents, materials, and other information in the possession or control of the Director of Insurance that are obtained by, created by, or disclosed to the director or any other person under the Insurance Regulatory Sandbox Act are recognized by this state as being proprietary and to contain trade secrets. All such documents, materials, and other information shall be confidential by law and privileged, shall not be a public record subject to disclosure by the director pursuant to sections 84-712 to 84-712.09, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. The director may use the documents, materials, and other information in the furtherance of any regulatory or legal action brought as a part of the director’s official duties. The director shall not otherwise make the documents, materials, and other information public without the prior written consent of the applicant. In order to assist in the performance of the director’s regulatory duties, the director:

(a) May, upon request, share documents, materials, and other information that are obtained by, created by, or disclosed to the director or any other person under the Insurance Regulatory Sandbox Act, including the confidential and privileged documents, materials, and other information subject to this subsection, with other state, federal, and international financial regulatory agencies, including members of any supervisory college under section 44-2137.01, with the National Association of Insurance Commissioners, and with any third-party consultants designated by the director, if the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials, and other information and has verified in writing the legal authority to maintain confidentiality; and

(b) May receive documents, materials, and other information, including otherwise confidential and privileged documents, materials, and other information, from regulatory officials of other foreign or domestic jurisdictions that have enacted laws substantially similar to the Insurance Regulatory Sandbox Act, including members of any supervisory college under section 44-2137.01 and from the National Association of Insurance Commissioners, and shall maintain as confidential or privileged any documents, materials, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or other information.

(16) The department shall not accept any applications for the regulatory sandbox after June 30, 2034.