Featured Product

    EIOPA Discussion Paper on Business Models Arising from Digitalization

    June 10, 2020

    EIOPA published a discussion paper on the insurance and reinsurance value chain and new business models arising from digitalization. EIOPA is aiming to get a better picture on possible fragmentation of the EU insurance value chain and supervisory challenges related to that. This paper is a first step in scrutinizing the situation to support supervisors in the challenges arising from the new business models and the possible fragmentation of the insurance value chain, as a result of new technologies, business models, and actors entering the insurance market. The discussion paper contains 21 questions to consider when responding to the request for feedback. EIOPA will assess the feedback to this discussion paper to better understand the phenomenon and plan useful next steps. Feedback on this discussion paper can be submitted, via the EU Survey Tool, by September 07, 2020.

    Complexity of how insurance is being manufactured and distributed is increasing, in addition to the growing involvement of third parties, with new forms of outsourcing. However, this can come with additional challenges in the form of legal and compliance issues as well as the creation of new conduct and prudential risks and amplification or relocation of significantly old risks such as operational risk, Information and Communication Technology (ICT) risks, security, governance, and reputational risks. The widespread use of third party providers can also lead to concentration risk if a large number of undertakings become dependent on a small number of dominant outsourced or third party service providers. Thus, a fragmentation of the insurance value chain could occur, including  a potential for a reduced regulatory and supervisory grip on the relevant activities in the value chain, or ways in which the lengthening of the value chain stresses existing regulatory and supervisory oversight.

    As a consequence, supervision requires more attention to different companies involved throughout the value chain that must be supervised, or at least identified and overseen efficiently and effectively. Supervisors are also challenged to improve their information gathering, knowledge, experience, skillset, and resources for controlling new models and technologies while keeping up with the rapid changes. The consultation also highlights that Solvency II regular reporting might not be fit-for-purpose to have an overview of cooperation with all third parties and there might be a need for more flexible reporting. Similarly, although Solvency II Directive provides rules for outsourcing, it might be worth exploring additional practices for proper supervision of more fragmented value chains. Effort is also needed to avoid diverging supervisory outcomes between national competent authorities, particularly considering that the insurtech developments can often have a cross-border and cross-sector impact. As per EIOPA, the possible areas for further work include the following:

    • More specific analysis of possible regulatory responses to third parties in the value chain. This could include exploring ways of getting better overview on market developments involving third parties active in the insurance value chain, including understanding ownership structures, partnership agreements, and new forms of outsourcing to assess who underwrites the risk and where risks are concentrated.
    • A follow-up study focusing on the impact of platforms and ecosystems and their practical supervision (licensing, outsourcing, consumer protection, product oversight, and governance rules), including the application of EU law and possible gaps.
    • Adapting disclosures and advice requirements to the digital world, based on an assessment of customer capabilities and new behavior patterns and ways of providing information and advice.
    • Further analyses of broader measures that might underpin sound digital markets in insurance and insurance related data.

    EIOPA is expecting, from interested parties, views on whether they agree with its view of the risks and benefits and whether they have any comments or additional proposals on proposed solutions or next steps. EIOPA will work further with the national competent authorities on supervisory responses to further support supervisors and supervisory convergence, while maintaining a strong and open dialog with the market and other stakeholders.

     

    Related Links

    Comment Due Date: September 07, 2020

    Keywords: Europe, EU, Insurance, Reinsurance, Operational Risk, Governance, Cyber Risk, Concentration Risk, Insurtech, Cloud Computing, Solvency II, Reporting, EIOPA

    Featured Experts
    Related Articles
    News

    EBA Publishes Standards on Disclosure of Investment Policy Under IFR

    The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).

    October 19, 2021 WebPage Regulatory News
    News

    EBA Updates Filing Rules for Supervisory Reporting

    The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    ECB Amends Guideline on Procedures for Collection of AnaCredit Data

    The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.

    October 19, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance for New Prudential Standard on Remuneration

    The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.

    October 18, 2021 WebPage Regulatory News
    News

    OCC Updated LIBOR Self-Assessment Tool for Banks

    The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).

    October 18, 2021 WebPage Regulatory News
    News

    TCFD Updates Guidance for Financial Disclosures on Climate Risk

    The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

    October 14, 2021 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel III Framework

    The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.

    October 14, 2021 WebPage Regulatory News
    News

    ACPR Implements Updates Related to DPM Version 3.1

    The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.

    October 14, 2021 WebPage Regulatory News
    News

    EBA Note Examines Transition Risks of Benchmark Rates

    The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.

    October 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7571