frankfurt The head of Eiopa, Petra Hielkema, calls for a strengthening and standardization of European insurance supervision. In the course of digitization, more and more insurers are offering their services across borders, the chairman of the EU’s insurance supervisory authority said in an online conference on Tuesday.
In most cases, this benefits European consumers. But it could also mean that insured people buy policies without knowing which country they come from, who is ultimately responsible if something goes wrong, and what the impact might be if the insurer goes bankrupt.
“In the spirit of the common market, that shouldn’t be a problem,” said Hielkema, who has been in charge of Eiopa since September. “Unfortunately, however, we are seeing more and more cases where clients are less protected in one EU member state and receive less compensation in bankruptcy than in another. From their point of view, this is unacceptable.” Therefore, there is an urgent need to harmonize consumer protection in the insurance sector.
Supervision must prepare for future bankruptcies
“Supervision is our strength. But we are only as strong as our power allows us,” said the Dutchwoman. “Too often we need too much time to solve these cases.” Eiopa is tasked with ensuring financial stability and protecting consumers, however it only sets the framework for national insurance supervisors.
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You have to make decisions now. If the EU states did not want central insurance supervision in Europe, the deficits would have to be resolved in another way. “The problem will not go away,” Hielkema said. Because no matter how resilient the insurance industry is and how strong the regulation is, you will still face bankruptcies from time to time and you have to be prepared for them.
Eiopa is therefore closely scrutinizing the EU Commission’s proposal for a directive on the restructuring and liquidation of insurance companies: “That would make sense for financial stability and for policyholders.”
Not all AI applications in the insurance industry are high risk
According to Hielkema, important issues that society and insurers also have to deal with at the moment are digitization, sustainability and diversity. In relation to digitization, the head of Eiopa particularly emphasized the aspect of artificial intelligence (AI). He welcomes the EU Commission’s proposal for an ethical and trustworthy approach to AI. But you have to take a closer look at the insurance industry.
Hielkema objects to insurers automatically classifying all AI applications as high risk. “Using AI in pricing and underwriting is likely to have a greater impact on consumers than a back-end app,” Hielkema stressed.
Furthermore, it must be recognized that the insurance industry is already heavily regulated. In his opinion, Eiopa and the national supervisory authorities should therefore be responsible for developing additional rules.
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