Report to examine impact of digital finance on European insurance market
18 February 2022
The European Insurance and Occupational Pensions Authority (EIOPA) is to conduct an in-depth examination of the impact of digital finance on “activities directly related to insurance" in several Member States.
EIOPA is an independent advisory body to the European Commission, the European Parliament and the Council of the European Union and is aiming to provide clarification on digital finance, taking into account the potential impact on consumers, the insurance industry and its supervision.
The move recognises the need for a uniform development of new digital insurance products and services within the EU. Digital technology is driving modifications in the insurance sector with technological advancements in the industry, changing the way customers interact with insurers.
This month a report summarising the European Supervisory Authorities’ response to the European Commission's invitation to provide recommendations on issues related to the world of digital finance was published on the EIOPA online portal.
It includes some insurance-specific recommendations to ensure that the EU regulatory and supervisory framework is adapted to the digital age. EIOPA, in cooperation with the other ESAs, has provided two specific recommendations, including that the definition of insurance and insurance-related activities needs to be questioned.
EIOPA recognises it may be difficult to identify which activities that are not strictly insurance-related may be conducted by an insurance company and therefore could be included in a series of new services resulting from digitalisation.
One potential solution could see digital activities directly related to insurance and insured risks, such as risk prevention or risk management services, considered as insurance or ancillary activities.
The second recommendation centres on the handling of P2P insurance with EIOPA noting that the current relatively low market penetration of P2P insurance business models and the fact that most business models appear to be covered by existing regulation, means there is not an urgent need for new regulatory approaches or particular changes.
The recommendations are part of a wider debate aimed at ensuring the EU’s financial services regulatory and supervisory framework remains fit-for-purpose in the digital age.
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