Insurance Europe has published its response to a consultation by the European Securities and Markets Authority (ESMA) on its call for advice on digital finance, which focused on the fragmentation and non-integration of value chains, digital platforms and the risks of mixed activity groups.
Regarding the fragmentation and non-integration of value chains, Insurance Europe said that cooperation/collaboration with partners has always been an important aspect of the insurance market: eg in the context of insurance intermediation. Developments in the digital environment have simply meant that the extent and diversity of collaboration has increased, allowing insurers to enhance the range of products and services offered to consumers to better serve their interests and needs.
Insurance Europe said an important potential benefit of digital platforms is that they may offer new ways and channels to access insurance and can potentially contribute to reducing insurance gaps. The most significant risk, on the other hand, is the potential for market distortions if a true level playing field and fair competition are not ensured.
Regarding the risks of mixed activity groups, Insurance Europe highlighted how the European insurance sector is a comprehensively regulated and supervised sector with a sound conduct of business and prudential framework in place. However, while new technological opportunities and new customer behaviour enable new service concepts, new service providers, such as BigTech have also entered the market. Maintaining a true level playing field between insurers and BigTech players, while avoiding regulatory arbitrage at European level, will therefore be crucial. The focus should be on ensuring that the regulatory framework in the insurance sector continues to be activity-based and follow the principle of “same activities, same risks, same rules”. This would help to ensure that even where their business activity focuses only on a specific part of the value chain, it is subject to the same rules as all other companies performing the same activity.