Insurance Europe said the European Commission should ensure regulation is future proof and technology neutral after a recent consultation on Fintech appears to have left the commission poised to tackle unjustified obstacles to digital innovation.
The European re/insurance federation emphasized that regulation should be “technology neutral,” – focused on activity, not technology, to ensure consumers can reap the full benefits of top-of-the-line advances while being effectively protected regardless of service provider.
Technological reform holds a promise of sky-high benefits for both underwriters and policyholders.
Insurance Europe explained that “automated advice can potentially provide consumers with more affordable and tailored information about their insurance products,” and as such, regulators have to ensure policies don’t impede growth or stifle innovative technologies “through regulation that is obstructive or that quickly becomes out-of-date.”
The federation specifically mentioned automated financial advice as a growing area of the insurance sector that’s quickly gaining traction with European players; “Automated advice can potentially help provide a more cost-effective way for some consumers to access advice, and may be considered as an option by some who might otherwise not be in a position to afford advice.
“Thus, it can have the effect of reaching more consumers and reaching new markets.”
Artificial intelligence and big data analytics for automated financial advice and execution fosters more immediate access to financial services for consumers and businesses; “Digitalisation, generally, will reduce the search costs for consumers significantly.
“Some customers might also simply prefer online/digital services and interactions rather than traditional human advisor interactions restricted to regular office hours.”
The federation also brought attention to the potential of new technologies like sensor data analytics to create “notably more accurate pricing, products better tailored to a client’s specific needs and better risk prevention.”
Insurance Europe’s comments on digitisation regulation come after European insurers recently voiced fears that new EU consumer protection rules – the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs) and the Insurance Distribution Directive (IDD) – could clash with consumers needs for digital-friendly products.
The new regulation was said to be paper-heavy, requiring re/insurers to send large amounts of information to consumers in a paper format by default and this goes against the move towards online-purchasing and use of products and Sergio Balbinot, European insurance and reinsurance federation’s president, consequently voiced concerns that regulators needed to take innovation within the industry into account, instead of creating rules that could bottleneck the digitisation revolution and hinder European players’ competitiveness.
Insurance Europe also dished out a reminder that in an era of tech innovation, cybersecurity is more relevant than ever before; “one important challenge offsetting the new opportunities (e.g. making use of the internet of things) will be ensuring cyber security,” – reiterating that taking measures to wall up protection gaps would be as vital for the industry’s future success as updating and transforming procedures.