APRIL | Open insurance | Open pensions | Open finance | Gen AI in insurance | EU Data Act | EU Health Data Space | Market trends

Welcome to the April edition of my personal monthly newsletter on InsurTech regulation and policy!

My aim with this newsletter is to keep you up to date with the latest developments in InsurTech regulation and policy in the EU and beyond.

However please note that the views expressed in this newsletter are exclusively my own and should not be considered as representing the views/policies of the EIOPA with which I′m affiliated.

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#InsurTech #FinTech #insurance #innovation #AI #ArtificialIntelligence #OpenFinance #OpenInsurance #GenAI

Artificial Intelligence and Machine Learning in financial and insurance services

Different parts of the financial services industry have adopted AI/ML technology to varying degrees and for various purposes. The increased use of AI/ML to deliver financial services has attracted attention and led to numerous policy issues and subsequent policy actions. ?First report prepared by the US Congressional Research Service provides technology overview including recent advances, application overview and a dedicated chapter on policy issues regarding the role of AI/ML in finance. Read more here .

Second report by Deloitte states that to realize the benefits of GenAI in insurance and banking, tech leaders should 'think big but start small'. It further states they should select the most impactful use cases to develop into production, establish robust governance and control measures, train their workforce, manage risk, and determine how to scale successful proofs of concept. Read more here .

Third report by the Alan Turing Institute is exploring emerging opportunities for safe and trustworthy adoption of LLMs within the financial services sector. It also provides some recommendations. Read more here .

Fourth report by PWC highlights 2024 GenAI insurance trends. It highlights that now when GenAI’s capabilities are becoming clearer, insurers are starting to make corresponding investments in five key areas:

• Creating delivery engines attuned to the demands of insurance
• Reimagining core functions and business processes
• Reinventing digital transformation
• Enhancing distribution and new business opportunities
• Strengthening the foundations of responsible AI use

Read more here .

Bringing Climate Tech to Market: The powerful role of insurance

Insurers are essential to rolling out the climate tech needed for industries to decarbonise, finds this the Geneva Association report. More concretely the report:

• Explores why insurability and the development of affordable insurance solutions are critical to expediting climate tech market readiness.
• Explains why existing frameworks need to be enhanced to allow climate tech stakeholders to better leverage re/insurers’ expertise, especially from the pre-commercialisation stages.
• Showcases examples of the benefits of early engagement between re/insurers and climate tech stakeholders.
• Presents an ‘Insurability Readiness Framework’ (IRF), which allows the risks identified by existing frameworks to be viewed through an insurance lens.
• Applies the IRF to two technologies: green hydrogen and carbon management.

Read more here .

The Building Blocks Supporting Open Finance

This CGAP working paper explains the importance of inclusive data ecosystems for financial inclusion of lower-income customers.

It underscores the role of open finance as a catalyst for inclusive data ecosystems.

The paper provides examples of open finance implementation in Brazil and India.

CGAP has also published technical guide that introduces a self-assessment tool that provides policy makers with practical tools to use when considering an open finance regime to advance financial inclusion.

The tool uses input provided by the user (a regulator, central bank, or sector support organization).

The technical guide includes a link to access the self-assessment tool.

Read more here and here .

FinTech and Digital Financial Services Ecosystem Data for Supervision and Market Intelligence

This report aims to guide regulators and central banks in adopting ecosystem-based data collection approaches, offering practical insights and a standardized taxonomy for enhanced decision-making, supervision, and the pursuit of financial inclusion goals.

It includes several examples from the EU such as the EU Digital Finance Platform and Common European Data Spaces.

Read more here .

UK open finance news

First paper sets out the Roadmap to Open Finance in the UK by proposing three different paths forward to implementation. Read more here .

The UK Government has also published a Smart Data Roadmap setting out plans to explore the use of Smart Data powers i.a. in banking and finance. Read more here .

Furthermore, the UK Government announced the creation of the industry-led Open Finance Taskforce. It will be chaired by the Centre for Finance, Innovation, and Technology (CFIT) and will build on the foundational work done by CFIT’s industry-wide coalition on Open Finance by providing recommendations to the UK Government on how financial data can be safely unlocked to improve SMEs’ access to credit. Read more here .

Finally, the Joint Regulatory Oversight Committee (JROC) has published its recommendations for the open banking Future Entity which will be at the heart of the open banking ecosystem and will continue to set the standards for open banking. Read more here .

Open Pensions in Switzerland

Swiss Fintech Innovations (SFTI) has published a position paper on “open pensions,” exploring how to facilitate the digital availability of pension data across all pillars within Switzerland – starting with the II pillar.

The mission is driven by the need to empower Swiss-based people to easily access and share their pension data.

It’s a longer and technical reading but worth highlighting that mandatory data sharing is proposed.

Read more here .

FIDA in the European Parliament

European Parliament Committee on Economic and Monetary Affairs (ECON) adopted their proposal for a harmonized framework for access to financial data at the EU level (FIDA or Open Finance framework to put it simple).

The file will be now followed up by the new Parliament after the 6-9 June European elections.

Read more here .

European health data space

The proposal for a regulation on a European health data space aims to improve individuals' access to and control over their electronic personal data (primary use), while facilitating data re-use for the good of society across the EU (secondary use).

It establishes a set of rules, infrastructure and governance mechanisms to promote the primary and secondary use of electronic health data, while ensuring data protection and strengthening cyber security.

Maybe worth to highlight that from insurance and financial services perspective recent text states that any attempt to use the data for any measures detrimental to the natural person, such as to increase insurance premium or to engage in activities potentially detrimental to the natural persons related to employment, pension and banking should be prohibited.

This European Parliament briefing note provides more detailed overview. The proposal is part of the EU Data Strategy.

Read more here .

Qatar Central Bank Issues Digital Insurer Regulations

Qatar Central Bank has issued "Digital Insurer" regulations defining the regulatory framework for Digital Insurer activities in the country.

Read more here .

EU Data Act overview

European Commission has published a comprehensive overview of the Data Act, including its objectives and how it works in practice.

The Data Act is a law designed to enhance the EU’s data economy and foster a competitive data market by making data (e.g. IoT data) more accessible and usable, encouraging data-driven innovation and increasing data availability.

This is among others important for insurance sector.

From insurance industry perspective it is important that the Data Act enables users of connected products (e.g. connected cars, medical and fitness devices, industrial or agricultural machinery, home IoT devices etc) and related services to access the data that they co-create by using the connected products/ related services.

This might enable certain aftermarket and ancillary services such as repair and maintenance services and data-based insurance.

It will become applicable on 12 September 2025.

Read more here .

Digitalisation in the European insurance market

This report by EIOPA is a "must-read" for the insurance community to better understand the dynamics, opportunities, and risks associated with ongoing digitalization projects in the European insurance sector.

It provides an empirical picture based on direct outreach to market participants and covers most of the EU markets. These results are complemented with inputs from a Eurobarometer survey providing customers' perspectives on certain digitalization aspects.

Key findings according to the press release:

• The level of?digitalisation?among European insurers is varied and, in most cases, still at an early stage.
• Digital-only?distribution channels?still lag well behind physical or hybrid ones. This is especially true for life insurance products where consumer prefer in-person meetings even though online tools are also used to compare products or get more information about certain offers.
• Phone calls, emails and face-to-face meetings are the most popular communication channels for the moment, but the use of?chatbots?is expected to rise significantly, not least of all due to the emergence of generative AI.
• Most insurers are active on?social media?and use this channel to interact with customers and to launch marketing and educations campaigns – on occasion in collaboration with influencers.
• Most insurers have active commercial?relationships with BigTech?firms. Nearly 80% of the respondents use BigTech companies for cloud storage services.
• Artificial intelligence?is already used by 50% of the respondents in non-life insurance and 24% in life insurance. Most current solutions have been developed in-house for simpler tasks with more explainable algorithms that retain human oversight. The expectation is that the use of AI will considerably increase in the years to come.
• Other technologies?such as the Internet of Things, blockchain and parametric insurance are currently only used by a small number of insurers.
• Insurers reported growth in the?cyber insurance market?over the past two years even though many cyber insurance products still exclude certain risks.
• Insurers see acquiring adequate?talent and skills?as central to a successful digital transformation. Lack of such talent and skills is seen as a major barrier to implementing digital solutions.

Read more here .