Featured Product

    EIOPA Responds to EC Consultation on Digital Finance Strategy

    June 29, 2020

    EIOPA responded to the EC consultation on a new digital finance strategy for Europe. In its response, EIOPA highlighted that a sound approach to financial innovation should strike a balance between enhancing financial innovation and ensuring well-functioning consumer protection and financial stability frameworks. EIOPA espouses further improvements in the areas of fit-for-purpose insurance regulations, ethical and transparent use of data, a common cyber incident reporting framework, and data standardization.

    In its response, EIOPA emphasizes that insurance regulation must be fit for purpose. For this reason, it is crucial to understand how new technologies and business models drive new risks and opportunities. Improvements and clarifications can be introduced, for example, on paper requirements by default, on the definition of insurance, and on outsourcing requirements. Additionally, there must be a fair, ethical and transparent use of data. Data is a key driver of financial innovations such as those enabled by artificial intelligence. Data analytics governance frameworks are crucial to engender trust and ground the use of data in common ethical principles. This is an area where stakeholders have called for more guidance, so EIOPA is working with an Expert Group on Digital Ethics in insurance to bring further clarity on fairness, explainability, and governance aspects of artificial intelligence and similar use cases. EIOPA also states that access to relevant datasets is critical for insurance. In this area:

    • EIOPA has recently started a broader discussion with stakeholders on possible balanced, forward-looking, and secure approaches to Open Insurance and its risks and benefits to the insurance industry, consumers, and supervisors. This work is ongoing and EIOPA sees some potential for the sector if handled sensitively. Different Open Insurance solutions could further facilitate the uptake of suptech.
    • EIOPA encourages EC to promote the interoperability of applications and portability of data between different platforms (that is, reduce lock-in effects) and to improve the power of consumers to switch between providers. 
    • EIOPA explains that a common cyber incident reporting framework is critical for sharing knowledge about incidents and to encourage the development and growth of sound underwriting practices. 
    • EIOPA believes it is critical that future standardization is built on what has already been achieved. EIOPA has extensive experience in this regard and is ready to be closely involved in future discussions on data standardization. Innovation and digitalization could also benefit from a wider adoption of existing standards (for example, the Legal Entity Identifier). The elements EIOPA considers as useful in terms of standardization are metadata management including schema and variables, data formats and common data models, and data exchange protocols and APIs.
    • EIOPA has not yet done detailed work on regtech; however, it has developed a suptech strategy. One of the areas commonly referred to when addressing regtech is supervisory reporting. In this case, the lack of harmonization of EU rules, namely consistency across definitions, formats, and processes within the financial services reporting legislation, needs to be achieved to contribute to further development of such tools. EIOPA considers that translating financial services legislation into machine-readable and executable reporting requirements could benefit both, the reporting entity and the supervisor. It is likely that the long-term future compliance with regulatory and reporting requirements will be largely algorithm/code based.


    Related Links

    Keywords: Europe, EU, Insurance, Fintech, Regtech, Suptech, Cyber Risk, Reporting, Solvency II, Machine-Readable Regulations, Digital Finance Strategy, EC, EIOPA

    Featured Experts
    Related Articles
    News

    PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK

    PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.

    April 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Methods of Prudential Consolidation

    EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).

    April 15, 2021 WebPage Regulatory News
    News

    EBA Updates List of Other Systemically Important Institutions in EU

    EBA updated the list of other systemically important institutions (O-SIIs) in EU.

    April 15, 2021 WebPage Regulatory News
    News

    BCBS Report Concludes Basel Risk Categories Can Capture Climate Risks

    BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.

    April 14, 2021 WebPage Regulatory News
    News

    UK Authorities Welcome FSB Review of their Remuneration Regime

    UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.

    April 14, 2021 WebPage Regulatory News
    News

    PRA and FCA Letter on Addressing Risks from Use of Deposit Aggregators

    PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.

    April 14, 2021 WebPage Regulatory News
    News

    MFSA to Amend Banking Act and Rules in Coming Months to Transpose CRD5

    MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.

    April 14, 2021 WebPage Regulatory News
    News

    EC Delegated Regulation on Specialized Lending Exposures Under CRR

    EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.

    April 14, 2021 WebPage Regulatory News
    News

    OSFI Proposes to Enhance Assurance Expectations for Basel Returns

    OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.

    April 13, 2021 WebPage Regulatory News
    News

    ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks

    ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.

    April 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6858