Keen to harness the benefits arising from InsurTech, the European Insurance and Occupational Pensions Authority (EIOPA) has set up InsurTech Taskforce (ITF). On 27 June 2018, it launched a stakeholder survey to develop a better understanding of best practices and possible regulatory barriers to innovation in the insurance market.
What is ‘InsurTech’?
By InsurTech, EOPIA is referring to:
technology-enabled innovation in insurance that could result in new business models, applications, processes or products with an associated material effect on the provision of insurance products and services
What is the focus of the survey?
The survey seeks views on the following key areas:
- whether there are any potential gaps or issues in the existing regulation (including any difficulties experienced by InsurTech firms applying for licences);
- whether there are any difficulties with regard to peer-to-peer (P2P) insurance in terms of authorisation, and whether there is a case for developing specific regulation;
- whether there are any barriers to InsurTech in European insurance legislation and, if so, how this should be addressed; and
- the ways in which competent authorities could take part in the facilitation of InsurTech (for example, through innovation hubs, regulatory sandboxes and innovation accelerators).
Which firms should respond to this survey?
EOPIA is keen to hear from InsurTech firms:
- that have an insurance license (for example, insurance undertakings licensed under Solvency II, insurance agents and brokers licensed under IDD and undertakings covered by national licence); and
- that do not have an insurance license (such as those collaborating with incumbents in the development of innovative solutions).
EIOPA also invites responses form start-ups as well as incumbents, across a wide range of business models, processes, and products in the insurance sector (including P2P insurance, Big Data, Internet of Things, blockchain/distributed ledger technology, Artificial Intelligence and Cloud Computing).
What will EIPOA do with the information it gathers?
Whilst InsurTech potentially offers a number of solutions to both insurers and consumers, EOPIA is mindful of the associated risks that may arise, and the corresponding need to ensure an adequate level of consumer protection and financial stability in the markets.
The data collected by EOPIA from the survey will therefore be used by the ITF to map the supervisory approach to InsurTech, with the aim of identifying and reporting on best practices and identifying possible regulatory barriers to financial innovation.
EOPIA has requested responses by close of business on 12 August 2018.
Osborne Clarke comment
The insurance industry has not been immune to the wave of technological change and innovation sweeping across our financial markets. Quite the opposite. According to EOPIA, InsurTech solutions using big data, algorithms, artificial intelligence, cloud computing, and blockchain technology are rapidly changing the insurance industry.
It is not, therefore, surprising to see that the FCA has included three more insurance offerings in cohort four of its regulatory sandbox, all of which champion the use of technology for the insurance sector (such as through the use of smart contracts, chatbot on Facebook Messenger that allows customers to buy and manage travel insurance, and services that leverage blockchain technology in the distribution of insurance products).
Drawing a parallel with the UK government’s FinTech sector strategy published earlier this year, it will be interesting to see whether the findings of this survey prompt the development of any InsurTech initiatives at a national level. This may be necessary if the UK wishes to position itself both as the FinTech and InsurTech capital of the world.