Digitalisation and Fintech

Digitalisation and Fintech

Insurance Hybrids

Most insurance intermediaries are nowadays what BIPAR calls “insurhybrids”. In the insurance value chain, insurance intermediaries use technology to optimise the speed, fluidity, efficiency and traceability of the transactions. In the customer-insurer relationship they are a human factor interacting with all kind of other means of communication.

Insurance intermediaries are specialised in managing customer relationships in the insurance process. Depending on several parameters regarding the customer (type, generation, situation) they offer life cycle-related or assets-related protection solutions and services.

Some intermediaries offer services such as product development, distribution or advice and claims administration. Their main function is customer interaction, facilitating and optimising the insurance process. Insurance intermediaries' activities keep the insurers under competitive pressure and help create trust in the market (by the combination of technology and human interaction). Their source of success is that they treat customers fairly and they comply with a series of rules which are designed by European and national regulators to protect consumers.

Intermediaries add their personal touch in terms of advice and service. They offer a wide variety of different customer experiences, for example, for house insurance, insurance intermediaries can offer prevention or detection advice in combination with tools such as apps and classic insurance. The customer can choose from a wide variety of services and experiences via a wide variety and combination of tools and systems (apps, web, telephone, face-to-face…).

Intermediaries who are insurhybrids also offer customer support using a variety of technological and less technological tools (assistance in selection, needs identification, demands identification, suitability) in selecting and contracting products and in dealing with claims.

FinTech

FinTech — technology-enabled innovation in financial services — has developed significantly over recent years and is impacting the way financial services are produced and delivered. The financial sector is the largest user of digital technologies and represents a major driver in the digital transformation of the economy and society. (source Commission Action Plan on FinTech)

At the end of March 2017, the European Commission launched a public consultation on: “FinTech: a more competitive and innovative European financial sector”. With the consultation, the Commission wanted to gather input to further develop its policy approach towards technological innovation in financial services and, more in general, to look at how to make the EU Single Market for financial services more competitive, inclusive and efficient.

In its response, BIPAR reiterated its position on intermediaries as “insurhybrids, adding that any approach the Commission would take regarding FinTech, should be a channel-neutral approach, including, for example, the access to sandboxes and the fact that overregulation should be tackled overall.

In November 2017, BIPAR also responded to a consultation on an EBA discussion paper on its approach to FinTech, setting out proposals for future work in areas within the EBA scope of action (such as the Mortgage Credit Directive and MiFID, but also cross-sectoral work together with the other ESAs). BIPAR stressed again the need for a level playing field and that for example new players should not be subject to lighter authorisation regimes. BIPAR suggested that regulation and registration should apply on the basis of the activity carried out.

In March 2018, the European Commission then published an Action Plan on FinTech: “For a more competitive and innovative European financial sector”. The Action Plan contains different actions around three main objectives:

  • Enabling innovative business models to reach EU scale (this includes actions regarding licensing requirements, standardisation, innovation facilitators)
  • Supporting the uptake of technological innovation in the financial sector (this includes actions such as a review of the suitability of existing rules by an expert group, removing obstacles to cloud services, an EU blockchain initiative, an EU Fintech Lab, leveraging technology to support distribution of retail investment products across the Single Market)
  • Enhancing security and integrity of the financial sector (cybersecurity/ cyber resilience).
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