On 12 October 2017, the Association of British Insurers (ABI) published a blog on the impact of the GDPR on innovation in insurance.
The ABI discusses a recent study on “Harnessing Innovation in European Insurance” undertaken by an independent research company, PAC, and BAE Systems. The study reports that “only one third of European insurers believe themselves to be highly innovative, however 70% believe that a failure to innovate will restrict growth or see them fall behind the competition”. In addition insurers believe that despite the clear drivers for innovation, regulation as well as ageing technology and infrastructure are seen as the biggest barriers to harnessing innovation.
Insurers view the General Data Protection Regulation (GDPR), which is due to come into force in May 2018, as having a potentially large and detrimental impact for the industry which may restrict data collection and processing activities, and/or create an additional compliance burden. The high cost of GDPR non-compliance, as well as the new obligations relating to the new consent model, restriction and objection to automated decision making and profiling; and fair processing notices is perceived as having a high impact to insurers.
On a more positive note, the ABI notes that it is reasonable to assume that an organisation operating with confidence and complying with reasonable, clear obligations can continue to develop new and innovative services as the GDPR aims to provide a level playing field in terms of data protection, within and outside the EU, both to protect EU citizens but also to explicitly support economic growth in the digital era.
The study also suggests that 60% of insurers see improving customer engagement as the primary focus of their innovation strategy and are looking for new ways to drive customer loyalty and acquisition. The GDPR, and the level of transparency it introduces, can therefore be the right vehicle to establish consumer trust and enable growth.