Insurely's responses to the European Commission’s consultations on the upcoming Open Finance Framework
As Europe is bracing for a new framework on open banking and open finance, we warmly welcome the opportunity to provide feedback on the upcoming proposal. We see it as a great opportunity to push for an industry in which both the end customer and the insurer win long term, thanks to informed choices powered by open data.
In our response to the European Commission’s targeted consultation on ‘Open Finance framework and data sharing in the financial sector’ and public consultation on the ‘review of the revised payment services Directive (PSD2)’, we emphasize the need for the development of an open finance framework which is consumer centric and that defines high standards of data protection and privacy for the consumer, accompanied by clear rules.
We are strong advocates for a clear, open finance framework which is consumer centric, giving consumers more power to leverage their data, while protecting their privacy. We are already offering services that help consumers share personal insurance data with our partners from both the banking and the insurance industries.
1. A consumer-friendly approach will unleash innovation
The current state of the insurance industry does not allow for innovation or effective data sharing. In order to maximize the potential of open finance while minimizing risks, not only should the data required for consumer-centric use cases be included in the first version of an insurance-specific framework, but enough data to comply with IDD standards for comparison should also be included.
2. Data privacy and consent-based data sharing is essential
Upcoming rules should enable a customer-friendly and intuitive journey for users, while also minimizing the scope of data opened. Rules should promote competition by allowing customers to access their insurance information for their own benefit. The following use cases are clear examples of the value created by data sharing and should be prioritized:
- Insurance/pension provider switchability
- Personal finance management (for insurance and pension)
- Simplified onboarding of customers to insurance companies (similar to the switching flow)
- Transparency into insurance products and product comparisons
- Tailored insurance products
3. Sharing financial/insurance data should create value for consumers first and foremost
Data sharing must unlock significant value for consumers, make the insurance industry more transparent, and ensure that insurance companies become more consumer centric. Data privacy and consent-based data sharing from consumers is key. The data covered by an insurance-specific framework should focus on adding customer value first. Opening up the right data categories can create great value for consumers, enabling easier switching, simplified onboarding, transparent products/coverage, and intuitive insurance management applications.
4. Data-enabled insurance should mitigate privacy risks
Choosing the right data to open up will be critical to ensuring the successful inclusion of insurance data within an open finance framework. Some use cases require opening data which puts consumer privacy at risk. For example, insurance products based on IOT devices have great potential but also raise concerns over financial exclusion, privacy, and access by bad actors, all of which lead to data abuse. Mandatory standardized APIs can create new business opportunities and increase the EU’s digital competitiveness. However, it is crucial that standards are being developed by supervisory authorities. Letting industry actors come to an agreement without such standards will take much longer and may result in a fragmented solution which primarily benefits themselves as they may not have the same big picture perspective that a supervisory authority does.
5. Consumers and providers should not be charged by financial firms when choosing to access their own data
Consumers should be in charge of their data and should have free access to it (as stated by GDPR). Third-party providers (TPPs) are collecting insurance data on behalf of the consumer, unlocking use cases which create an overall better end-to-end experience for consumers. Charging these TPPs for collecting consumer data would create a barrier for consumers in accessing their data and may remove any innovation that is not profit driven (thus limiting potential value for the end consumer). For instance, Insurely’s data collection services leverage consent to collect data from consumers’ insurance providers; the collection happens instantly, and the consent is only valid for one retrieval.