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Other Initiatives Related to FinTech/InsurTech used by (re)insurance undertakings. According to EIOPA, it is regulatory and supervisory expectations. However, some EIOPA understands as regulatory barriers to Insurtech those
used mainly by newcomers, within a few market niches and competent authorities believe that some operational legal provisions that are outdated and/or unnecessary
o Outsourcing to cloud service providers by larger undertakings for non-critical functions. However, challenges or risks could be slightly increased by innovation and/or excessive in a digital environment and where the
EIOPA published in March 2020 its Guidelines on outsourcing as part of their wider digital transformation strategies many facilitators (keeping pace with the industry, domestic underlying public policy objectives might be achieved in a
to cloud service providers. Cloud services are a combination European large (re)insurers are expanding using the cloud. coordination and cross border cooperation and an impact comparable way without hindering financial innovation.
of a business and delivery models that enable on-demand on a level playing field). EIOPA found that, while addressing some of the barriers may
access to a shared pool of resources such as applications, EIOPA concluded that the purchase of cloud computing justify legislative changes (such as the paper requirement
servers, storage and network security. The services are, services falls within the broader scope of outsourcing Based on this analysis, ESAs propose a set of best practices by default), others are justified from a regulatory and
typically, delivered in the form of Software as a Service (Solvency II, EIOPA Guidelines on system of governance). for the design and operation of innovation facilitators. The supervisory standpoint, or may be addressed by the
(“SaaS”), Platform as a Service (“PaaS”) and Infrastructure as However, the current guidance on these regulatory best practices are intended to: (i) promote consistency across application of the principle of proportionality (e.g. existing
a Service (“IaaS”). measures, including at national level, is not homogenous. the single market in the design and operation of innovation capital requirements) or via practical guidance (e.g.
At the same time, the majority of the NSAs responsible for facilitators; (ii) promote transparency of regulatory and outsourcing requirements for cloud computing services,
The aim of these Guidelines is to: both banking and (re)insurance supervision are considering supervisory policy outcomes resulting from interactions access to data, processing of personal data and Big Data
(a) provide clarification and transparency to market the Recommendations issued by the European Banking between competent authorities and firms in the context Analytics tools).
participants avoiding potential regulatory arbitrages; Authority (EBA), which have been integrated into further of innovation facilitators; and (iii) facilitate cooperation
(b) foster supervisory convergence regarding the Guidelines on outsourcing arrangements as a reference for between national authorities, including consumer and data o Report on best practices on licensing requirements,
expectations and processes applicable in relation to cloud the management of cloud outsourcing. EIOPA developed protection authorities. peer-to-peer insurance and proportionality
outsourcing. Draft Guidelines on Cloud Outsourcing in 2019, building Amongst the 7 operating principles for regulatory In March 2019, EIOPA published a Report on “Best Practises
on the substance of the EBA Recommendations and had sandboxes, it is interesting to note the following one that on Licencing Requirements, Peer-to-Peer (P2P) Insurance
These Guidelines are addressed to insurance and launched a consultation seeking for stakeholders input. is an important principle that BIPAR has been promoting and the Principle of Proportionality in an InsurTech Context”.
reinsurance undertakings (collectively ”undertaking(s)”) over the last years: “Regulatory sandboxes should not As part of the European Commission’s Fintech Action Plan,
and to competent authorities and they provide guidance o Innovation Facilitators allow the disapplication of regulatory requirements under EIOPA mapped in its Report current licencing requirements
on how the outsourcing requirements foreseen in Articles The ESAs published in January 2019 a Joint Report on EU law. However, levers for proportionality available regulated in Solvency II and in IDD, assessed how they
13(28), 38 and 49 of the Solvency II Directive and Article 274 innovation facilitators: regulatory sandboxes and innovation to the relevant authority/ies may be made available in apply to InsurTech firms and analysed how the principle
of the Delegated Regulation should apply in the context of hubs. The ESAs define innovation hubs as “schemes the context of regulatory sandboxes and applied in the of proportionality is being applied in practice in the area of
outsourcing to cloud service. whereby regulated or unregulated entities can engage with same way as to firms outside the sandbox. Explanatory financial innovation (e.g. InsurTech start-ups).
competent authorities on FinTech-related issues and seek notes: Regulatory sandboxes may not be used as a
non -binding guidance on the conformity of innovative mechanism to dispense with requirements under EU Based on the evidence gathered, EIOPA found that the EU
financial products, services, business models or delivery law, such as the requirement to obtain a licence before InsurTech market is at an early stage but evolving. EIOPA
mechanisms with licensing, registration and/or regulatory carrying out certain financial services, such as payments believes that regulation and supervision must be technology
requirements.” Regulatory sandboxes, on the other hand, services, insurance services etc. Levers for proportionality neutral (mainly for consumer protection reasons) and must
are defined as “schemes set up by a competent authority embedded into law, for instance with regard to systems ensure a level playing field and it underlines that facilitating
that provides regulated and unregulated entities with the and controls requirements, may be applied in the context innovation is not about de-regulation. To the extent that
opportunity to test, pursuant to a testing plan agreed and of firms participating in a regulatory sandbox in the same InsurTech activities involve the carrying out of a regulated
monitored by a dedicated function of the relevant authority, way as to firms outside the sandbox” activity, the appropriate licence is required. In line with
innovative products or services, business models, or delivery normal authorisation practices, a proportionate approach
mechanisms, related to the carrying out of financial services”. The ESAs explain in the report that they will continue to may be applied for the assessment of conformity with the
monitor developments regarding national innovation conditions for authorisation (e.g. in terms of expectations
The report sets out a comparative analysis of the national facilitators in the EU and will take further steps to promote regarding governance processes, systems and controls
innovation facilitators established to date within the EU an accommodative and common approach towards FinTech requirements, which take into account the specificities and
Member States. The majority of competent authorities in the EU. risks inherent to InsurTech).
reported that innovation facilitators offer opportunities
EIOPA published in March 2019 a Report on “Outsourcing to gain a better understanding of innovation in financial o Regulatory Barriers to InsurTech EIOPA concludes that so far there seems to be no need for
to the Cloud: EIOPA’s Contribution to the European services (gaining nearly “real time” insights into emerging Following a consultation via an online survey, EIOPA has further regulatory steps considering licencing requirements
Commission Fintech Action Plan”. Based on a survey technologies and their application in the financial services, identified a number of potential barriers for InsurTech in and the principle of proportionality. However, EIOPA
conducted by the National Supervisory Authorities (NSAs), anticipating regulatory/supervisory issues, responding European insurance legislation. proposes to NCAs non legally binding best practices in
EIOPA found that cloud computing is not yet extensively proactively etc..) and for firms to understand better the relation to InsurTech licencing requirements and the

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