Ade­quate rights for the digi­tal world

Customer data is the key resource for the core business of insurance companies. It provides the “raw material” for established business processes and the basis for developing new digital offers. However, consumers need to be able to decide for themselves who is to receive their digital data and what happens with it. For example, every vehicle owner must be able to decide whether to provide their vehicle data to an insurance company for a telematics rate. The customer has to be able to rely on security and integrity being applied to the use of their personal data. Insurers have therefore committed to a code of conduct for data processing that implements the strict requirements of the General Data Protection Regulation (GDPR).

The General Data Protection Regulation (GDPR) sets stringent conditions for data use across Europe. It enables automated decisions to be challenged and submitted to a manual review. Other laws, for example the General Act on Equal Treatment or the law against unfair competition, protect consumers irrespective of the carrier. The current level of protection is adequate. Any more regulation could actually prevent innovation in Europe, weakening its position on the international market. That would be to the detriment of both insurers and consumers.

The ePrivacy Regulation could prove a worthy addition to the current legal structure. However, its scope of application needs to be clearly defined and differentiated from the GDPR. GDPR-compliant business models cannot suddenly become inadmissible because of the ePrivacy Regulation. Subjecting the same issues to conflicting regulation creates legal grey areas, and this must be avoided. The ePrivacy Regulation therefore needs to be carefully structured.

Digitalisation has made competition on the insurance market more multi-faceted and intensive. Customers’ expectations of insurers stem from their online experiences elsewhere. People can contact insurers and brokers, find out about products, conclude or amend contracts or make claims much faster than before. Many consumers also use comparison platforms. However, many portals are not transparent in how they rank products or how many market participants they cover. That needs to improve in the interests of consumers.

The information glut facing consumers has increased considerably in recent years. That does not advance the politically desirable objective of tailored consumer information, however. We believe the best way for policyholders to make a decision is by reading concise information sheets provided to them in advance. The applicable framework conditions contain duplications and contradictions. The scheduled evaluations should therefore be used to harmonise current regulation.

Customers need to rely on artificial intelligence systems making fair and non-discriminatory decisions. Differentiation is not discrimination, though; this is an important distinction. Differentiation is fair as long as it doesn't lead to discrimination. Insurers have traditionally relied on algorithms for risk-based premium differentiation. The applicable legal framework also extends to the digital world. Therefore, the Federal Financial Supervisory Authority (BaFin) can review product conditions, calculation bases as well as the underlying algorithms and intervene where necessary.

The rapid technological advances of recent years have not been purely beneficial. They have also understandably raised some concerns. That is why an open debate on the ethical use of algorithms, big data and artificial intelligence is needed. Opportunities and risks must be given equal attention. Only then will society accept new technologies.