Regulations pose challenges for insurtech innovation
A major challenge posed by insurtech is how to achieve innovation and improvement in a highly regulated sector, Andrea Best, a London-based partner at law firm Drinker Biddle and Reath, told Baden-Baden Today.
For example, while on-demand insurance that can be turned on and off is an appealing idea, it poses an issue when there are laws requiring that an insured must be given a free look period of cover, during which time the policyholder is able to terminate the contract without surrender charges. Laws requiring certain notice periods prior to cancellation and non-renewal pose another problem.
“The trend of embedding insurance into the purchase of another good or service is another challenge that is not new to insurtech. It requires innovative solutions on how to achieve that in the digital world when there may be laws in some cases about whether such tying-in is permitted,” Best continued.
She said another hot topic is whether and how you can compensate someone for insurance referrals.
“Again, this is not a new issue per se but a new context, so “The question is how old laws—in some cases anyway—apply to new ideas.”
Looking at the future of insurtech, the upcoming General Data Protection Regulation (GDPR) could have a massive impact, she added. With the amount of personal data that could be collected under some insurtech programmes, Best believes it will be key for those in the sector to make sure they are ready to answer questions around how they will get consent from their customers, or how they control who has access to the data.
Insurtech is also driving a trend for streamlining within the industry, she said, with everything being made as simple as possible from the customer’s perspective.
“One policy wording to fit all, one point of contact, one streamlined way to get claims paid—it can be a real challenge,” she said.
Disintermediation is another form of streamlining linked to insurtech.
“With tech players becoming licensed brokers and going straight to the carriers, it will be up to the more traditional brokers to continue to find new ways to add value and stay relevant,” Best concluded.
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