It is truly satisfying to watch the insurance industry being finally ready to cast off the shackles of the archaism to embrace the technological stance of development. The insurtech market is steadily filling with innovational projects, and go2solution(Kasko2go) is privileged to find itself among the builders of the new insurance domain. However, there is a long way ahead, and there are still a number of challenges to be tackled. Regulatory issue is, in fact, the one nagging ones, as the renovation of the sphere logically demands to rethink of the normative framework.
The transformations of the regulations can be reduced to facilitating the improvement of insurance products. Consumers are constantly changing, and so are their expectations: they want more personalization, ease, and transparency. The insurance policies aim to foster innovation, increase competition and insurance coverage, reduce compliance costs without losing the prudential aspects that the sector demands. And the insurance regulation is required to keep the pace with all of these pressures. Simply keep pace with swift changes.
In the times of increasingly, tech adoption the regulators are expected to apply the latest tech advancements to enable, broad, deep and real-time supervision of the insurance market (which is what they could not have dreamt of ten years ago). It is essential the regulators evolve in synchrony with the insurers and adopt newly available tech tools in order to expand their regulatory arsenal, and be able to respond to the tech-driven industry. Regulatory environment needs more complete and granular perspective on the market and its constituents. basically, real-time oversight can replace the retroactive regulations we see today.
Historically, regulation has been designed tech-neutral, which is no longer viable. Insurance carriers will be looking for reassurance and it has a lot to do with culture: a huge percentage of the insurance entities have low-risk or even no-risk attitude towards regulatory compliance. One of the areas of regulatory risk, which is to be kept to the fore, is related to data security and privacy as long as the insurers process large amounts of personal data. It is especially relevant when working with numerous partners fragmented supply chains — some of them might not be familiar with data security regulation.
There is a distinction between how the things are done in USA and Europe, which is worth thinking about. American insurtech startups design their processes in compliance with the US privacy laws. On the other hand, the European startups must build into their systems data protections compliant with GDPR. Internet scraping for data, for instance, is quite popular in the USA and this practice is not that easy to conform the European regulatory framework.
In our pursuit of the community of safe driving, we assume to receive an entire movement of conscious and responsible people, engaged in co-creation of the new environment. This implies the new rights being given to individuals to control the manner in which their personal data is used. This is a very important aspect to be taken into account at the stage of product and process design.
Moreover, the regulatory responsibilities will go up to the board level. The board members must be obliged to ask the probing questions concerning balances and checks integrated into the new AI-driven systems and make sure the management information quality is appropriate. In other words, 'I have no idea how it works' will not fly with the regulators. Here the regulators have to keep in mind the experience of the wholesale banks and the algorithmic trading: the dominant majority of the board members simply were not able to assess the risks.
Regulators' embrace of the cutting-edge tech is just a matter of time, and insurers must be well-prepared for the simultaneous challenges. Regulators are expected to sustain high demands with regard to compliance. When budgeting remains the primary constraint for the regulators to move forward, they must be focused on providing the information to the public legislators about how innovations are essential to the health of the insurance industry.