New technologies are already driving efficiencies and other benefits within the insurance sector. With more widespread adoption, regulators are focused on identifying opportunities and challenges that they may need to respond to. For its part, EIOPA recently invited comment on a discussion paper on blockchain and smart contracts in insurance. The paper aims at providing ‘…a high-level overview of risks and benefits of blockchain and smart contracts in insurance from a supervisory perspective.’
Given the wide interest in the potential uses of blockchain and related technologies in credit insurance and surety markets, ICISA was pleased to deliver a response to EIOPA on behalf of our members. This response set out the projects underway between ICISA and our various partners, including the surety Power of Attorney blockchain project – the most advanced of these projects. We described the expected benefits these projects can deliver in terms of the greater transparency and certainty they can provide, as well as the potential savings that blockchain related technologies offer.
The response also described some of the challenges posed by introducing such new technologies, including the need to ensure wide adoption of solutions to avoid overlapping systems that may not work well together being developed to address the same problems. It was also noted that given the early promise seen in the Power of Attorney project, efforts will also turn to wider topics which may have more universal appeal in global surety markets.
ICISA also commented on questions posed by EIOPA on the desired supervisory environment to support the continued adoption of new technologies in a safe environment. We noted the benefit for close cooperation between regulators, particularly within the EU structures, will have for providing certainty to those developing and implementing technological solutions. Regulators should be kept informed of new developments and continue to provide opportunities for trialling new products, services and systems through regulatory sandboxes. It is also important that regulators maintain an open and flexible attitude to new developments and where they have been adequately informed throughout the project, that they seek to support developments rather than act to constrain these unnecessarily.
ICISA declined to offer a view on other questions within the discussion paper which others may be better placed to respond to, however, we will continue to monitor developments and highlight the innovative solutions that are being developed throughout the surety and trade credit insurance sectors. Regulators around the world are also exploring opportunities through regulatory technology (RegTech) and supervisory technology (SupTech), which may support their understanding of insurance products and markets. This is likely to be an area of further growth in the future. Regulators see this as a way to have more regular and automatic access to data either as part of ongoing regulatory reporting or ad hoc investigations.
We will continue to work with key stakeholders within the industry, as well as regulators and policymakers to provide views on behalf of our members on the key challenges and opportunities presented by new technologies. If you wish to discuss our approach further, please contact Daniel de Burca today.