Regulatory hurdles push up costs for majority of insurers
Regulatory barriers to digitalisation have resulted in additional costs for 60 per cent of insurers during Covid-19 lockdowns, with 50 per cent of insurers reporting lost sales and/or operational impacts
The Geneva Association announced these results in an issue brief titled Regulatory Considerations for Digital Insurance Business Models. This is one of several findings by the association which conducted a global survey of insurers and reinsurers in July and September last year. The results of the survey form the basis of the issue brief.
Other key findings are:
- Insurance regulatory frameworks are perceived to be much less conducive to digitalisation than macro-level factors, such as government policies, digital infrastructure and local culture.
- The three most cited regulatory barriers are paper document delivery provisions, insurance distribution regulation, and a lack of telehealth provisions for medical exam procedures.
- Engagement and co-operation between regulators and the insurance sector, and a technology-agnostic regulatory framework, are the two most common factors for conducive regimes.
Covid-19 highlights critical role of frameworks
The Geneva Association says that the Covid-19 pandemic has highlighted the critical role played by national regulatory frameworks in both hindering and facilitating the shift to digitalisation in the insurance industry. Digitalisation is not a goal in itself, but provides insurers and their customers with benefits that are particularly useful in situations where in-person interactions cannot take place, played out in its fullest form during the Covid-19-induced lockdowns.
The Association encourages regulators to deepen exchanges with their peers, particularly in countries that have a thriving digital insurance ecosystem, such as Singapore and China.