Digi­tal sin­gle mar­ket

Fair com­pe­ti­tion with room for inno­va­tive crea­ti­vity

The insurance sector is changing fast to exploit the inherent opportunities of digitalisation. Companies are modernising their IT systems, deploying cloud solutions and integrating new technologies, such as artificial intelligence (AI), blockchain or the internet of things. However, the companies’ efforts need to be complemented and supported by an adequate and effective regulatory framework.

Pro-innovation framework for key technologies

Artificial intelligence (AI), blockchain and cloud computing are key technologies offering major potential and they need to be supported accordingly.

The EU has already identified a range of measures relating to AI, which must now be consistently implemented. Besides ethical issues, success depends primarily on the investment framework for research and development (R&D) and the availability of sufficient data. Given the significance of the industrial sector, it offers considerable AI potential through the data contained in vehicles and machines.

Effective structures are already in place for blockchain technology: the EU Blockchain Observatory, the Blockchain Forum, the European Blockchain Services Infrastructure (EBSI) and the International Association for Trusted Blockchain Applications (IATBA). They will be maintained and developed under the new Commission.

Europe also has a strong foundation for cloud computing with its modern data protection standards and data transfer regulations. As cloud computing could turn out to be a catalyst for the digital single market, policymakers should aim for a cloud-friendly regulatory framework as opposed to the overly complex and fragmented status quo. It is already evident that the application of the current convoluted outsourcing regulations would not be an optimal fit with cloud computing in many instances. Such extensive requirements could prevent some insurers from exploiting cloud computing to its full potential. Certification by central offices would make the process of reviewing cloud providers considerably easier.

Guaranteeing regulatory principles

Digitalisation needs a fair and competitive playing field that leaves enough room for entrepreneurship and pioneering creativity; many insurers already operate their own innovation labs, or are setting up venture capital funds or founding start-ups. The key to striking that balance is a principle-based approach with the following elements:

  • Consistent use of the proportionality principle: Differentiated regulation must be possible to exempt lower-risk insurers from bureaucracy and thus free up more resources for innovation.
  • Standard competitive conditions: Market success must come from offering good products and services to customers. Market distortions through unjustified regulatory discrepancies must be avoided. A sustainably efficient insurance market requires an effective competition policy guaranteeing fair competitive conditions for the different provider groups.
  • Technology-neutral regulation: Client communication by e-mail or a messaging service must not be hindered by excessive data protection requirements. All processes should be allowed to run securely and without media disruption via electronic channels.

Countering the IT skills shortage

Even the best legal framework is ultimately useless if the companies lack the resources to implement digitalisation projects. A shortage of IT skills is the main challenge. There are already not enough graduates to meet the growing demand for IT professionals across all sectors. As a result, there are many jobs in the insurance sector (inter alia) with no-one to fill them, which may require external – sometimes very expensive – labour. This calls for broadly based initiatives to equip young people with IT skills so they can do this work. On that note, the insurance sector welcomes the initiatives already launched by the EU. Reducing the IT skills shortage should remain a priority for the new Commission.

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