European Commission proposes changes to insurance rules…Managing predictive behaviour in insurance

European Commission proposes changes to insurance rules

Compiled by Insurance24

HARARE, The Motor Insurance Directive may be set for an overhaul, if changes proposed by the European Commission pass through.
The Commission, which is the executive of the European Union, has put forward a proposal aimed at strengthening EU rules on motor insurance.
Announcing the proposed changes and signaling the start of the feedback period, the governing body said it wants better protection for victims of motor vehicle accidents, as well as improved rights for insurance policyholders.

Proposed changes to the current EU motor insurance rules cover the areas of insurer insolvency, claims history, uninsured driving,  minimum cover, and scope.

For cases involving insolvent insurers, the Commission is pushing for victims to be “rapidly and fully compensated” in their Member State of residence.

“An accident which involves a liable party with an insolvent insurer poses two main issues,” read the proposal. “It is not always clear who, if anybody, is responsible for the initial compensation of the victim (‘front office’). Second, it is unclear who bears the ultimate financial responsibility for the claim (‘back office’).

“These issues are particularly important when the insurer is providing insurance cross-border via free provision of services. In a number of recent such insolvencies, victims of motor accidents caused by policyholders of the insolvent insurers suffered delays in payment of compensation, while national legal procedures determined the responsibility for and the level of compensation.”

With its proposal, the Commission wants to ensure that the ultimate financial responsibility is borne by the insurance sector of the home Member State of the insurer.

In terms of claims history statements, the goal is to get them on equal footing regardless of whether they were issued domestically or

by an insurer in a different Member State. Also, the Commission wants to address uninsured driving by reinforcing Member States’ “powers to combat” the issue.

As for minimum amounts of cover, the proposal is advocating the same level of minimum protection throughout the EU – setting out harmonized minimum protection levels for personal injury and material damage.

In its announcement, the Commission cited the slight differences in current minimum levels between Member States.

Scope-wise, the Commission stated: “To ensure legal certainty and clarity, the present proposal codifies the Court jurisprudence in EU legislation. This ensures uniform implementation of the Court case law
in national law.”

Citing judgments of the Court of Justice of the EU, the body said accidents caused during the normal use of a vehicle for the purpose of transportation – meaning even while on private properties – are covered by the directive.//end


Managing predictive behaviour in insurance

By Insurance24

HARARE, Predictive and behavioural analytics enables better risk mitigation, fraud detection, and customer insight for insurers. Kelly Preston, data analytics manager at SilverBridge, believes that this provides organisations with a better understanding of how to approach not only solution development but also customer management.

“Being able to use these advanced analytical tools allows insurers to optimise business processes across the likes of sales, marketing, service delivery, and compliance. Furthermore, this approach will see data become more integrated into all aspects of the business instead of remaining in various silos with departments unable to see the whole picture,” she says.

We find ourselves in a time where insurtechs are flooding the market, thereby taking with them much-needed attention of customers. To counter this, traditional insurers must embrace predictive and behavioural analytics to regain the competitive advantage, or at the very least, be seen to be agile and willing to change.

Fortunately, the amount of data is pressurising insurers to view its importance in a new light. Given how rich data has become, and the sheer variety of data sources at their disposal, decision-makers are able to extract vital insight to revise their strategic approaches. Of course, this requires a different mindset and a willingness to adapt to new market requirements.

Risk in Africa

“While the use of these models to gain insight for more bespoke customer solution development is important, the real value for insurers doing business in Africa comes in terms of risk management and fraud detection. Having the ability to optimise underwriting risk becomes a significant competitive advantage. Additionally, insurers are still struggling to overcome the challenge of paper-based solutions. Thus, being able to better assess, review, and audit for fraud can save the insurer a significant amount of resources,” she says.

Of course, leveraging predictive and behavioural models to their optimum only works in conjunction with the existing actuarial data that the insurers have at their disposal. Using the best from unstructured and structured data sources empowers an insurer to more efficiently review and assess for risk and fraud.

“The emergence of real-time data monitoring in recent years has added a further tool in the armoury for local insurers looking to differentiate themselves from competitors, both traditional and insurtechs. Using data sources like telemetry data (and other Internet of Things-related devices), social media postings, and mobile apps, insurers can create a rich environment where behavioural analysis can come into its own.”

However, it does not mean insurers have to adopt an all-or-nothing approach. Instead, they can embark on the transformation journey with smaller, more dedicated projects, and gradually filter it through to the rest of the organisation. In this way, they can build business cases that show the value of predictive and behavioural models for C-suite executives and make the overall transition smoother.

“It is clear that the insurance environment has been evolving in recent times. Those who are the most willing to adopt new practices and utilise all available data resources to affect that change, will be the ones that remain competitive in the months and years to come,” she concludes.

Silverbridge Blog