European regulations don't support insurtech
Industry body Insurance Europe has said current regulations on insurtech do not allow consumers or companies to experience the full benefits of digitisation. It advises that legal guidelines should be technologically neutral, accommodating of digital and encompassing of any future developments, with the body recommending changes to current policy. Insurance Europe has criticised the paper requirements being introduced by the Insurance Distribution Directive, stating that they hold back innovation. It has suggested the use of “regulatory sandboxes” to test novel insurtech solutions and international discussions for consistency. It also stressed that established companies should have opportunities to innovate as well as start-ups.
Insurance Europe said "product innovation and claims settlement" in the insurance market is set to be impacted by new types of 'insurtech'. However, at the moment, it said, the system of insurance regulation does not "allow consumers, established companies and new market entrants/start-ups to benefit from the opportunities digitalisation can offer".

"Insurance legislation, rules or guidelines should be digital-friendly, technologically neutral and sufficiently future-proof to be fit for the digital age and encourage digital innovation," Insurance Europe said. "Rather than automatically introducing new regulation for the digital age, policy-makers at EU and national levels should review how the application of existing rules and policy approaches might be adapted to meet digital developments without incurring major regulatory change."

Insurance Europe took issue with "paper requirements being introduced in the new Insurance Distribution Directive" which it said is the kind of regulation that can "hold back innovation and the provision of online services, which consumers already expect to be easy to use and available".

While policy making and regulation may need to adapt to the times, it urged against "an ongoing stream of highly-detailed technical rules and guidelines". Such an approach "risks overwhelming both policymakers and business with requirements that are already obsolete by the time of their adoption", it said.

In its insight briefing, on supporting innovation in insurance in a digital age, Insurance Europe said that regulation of insurtech should be "activity-based", so that there is equal protection for consumers regardless of whether they buy insurance cover from a new market entrant or via an established insurer.

Insurance Europe backed the use of 'regulatory sandboxes' and other tools to help firms test new insurtech solutions. It said those schemes should involve support for both insurtech start-ups and insurance market incumbents experimenting with new technologies.

"While there should be no unnecessary barriers to insurtech start-ups having proper market access as new entrants, it is also important that existing insurers have the opportunity to develop innovative products and services aimed to benefit consumers, outside of the strict confines of the regulatory regime," Insurance Europe said.

Among its other recommendations, Insurance Europe called for EU authorities to liaise with policy makers based elsewhere in the world "to promote mutual understanding, consistency and convergence of policy solutions".