Regulatory hurdles push up costs for 60% of insurers during COVID-19

Regulatory barriers to digitalisation have resulted in additional costs for 60% of insurers during COVID-19 lockdowns, with 50% of insurers reporting lost sales and/or operational impacts, says The Geneva Association in an issue brief titled "Regulatory Considerations for Digital Insurance Business Models".

This is one of several findings by the Association which conducted a 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:

1. 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.
2. The three most commonly cited regulatory barriers are paper document delivery provisions, insurance distribution regulation, and a lack of telehealth provisions for medical exam procedures.
3. Engagement and cooperation between regulators and the insurance sector, and a technology-agnostic regulatory framework, are the two most common factors for conducive regimes.

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 findings of the survey, and the additional case studies presented in the paper, support continued efforts to develop a regulatory and policy environment that is more conducive to the digitalisation of insurance. Regulators should adopt a technology-agnostic framework ready to accommodate future technological developments, while regulatory relief provided during lockdowns to allow for electronic signatures would need to be made permanent, and potentially extended across product categories, says the Association.

More work is needed in the area of electronic identities, which requires efforts from both insurance regulators and the wider policymaking community. 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.

Source: Asia Insurance Review