The European Insurance and Occupational Pensions Authority (EIOPA) published its report on best practice among authorities licensing InsurTechs across Europe.

As part of the European Commission's Fintech Action Plan, the document presents a mapping of current authorising and licencing approaches to financial innovation, including an assessment of how the principle of proportionality is applied in practice. It also includes an analysis of the approach to InsurTech startups operating as peer-to-peer (P2P) insurers.

The evidence gathered points to an InsurTech market in the EU that remains at an early stage of development, but which at the same time is evolving.

Most national regulators have limited experience with InsurTech companies or do not differentiate "digital" business models from others, although 24 authorities have implemented innovation facilitators, which implies that most are aware of the importance of innovative technologies and new market players, and the need to understand the associated risks and benefits.

Therefore, EIOPA stated that there seems to be no need for further regulatory steps on licensing.

“However, authorities should adapt their internal processes and knowhow to reflect the impact of digital transformations and avoid diverging supervisory practices taking into account the cross-border and cross-sectoral nature of some InsurTech developments,” the report read.

“The rise of new technology driven business models, the use of new technologies like artificial intelligence (AI) and distributed ledger technology (DLT), and the need to rise to the challenge of sound authorisation and on-going supervision of highly digitalised insurers, requires close monitoring of developments.”

EIOPA suggested authorities should further enhance cooperation and the exchange of experience among each other, and laid out some next steps:

• Explore options to develop a network of innovation facilitators for the benefit of authorities and InsurTech firms.
• Assess what InsurTech-related data might need to be collected systematically to support authorities and EIOPA work on InsurTech.
• Spearhead further work on understanding new technologies and different business models, including the impact of InsurTech on traditional business models on insurance companies.
• Monitor outsourcing and the developments in licencing InsurTech companies.
• Analyse the potential growth of the P2P insurance market.

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