At Delonia we believe that it is necessary to understand and understand the industries and businesses of our clients, in order to have a better position from which to solve with technology and digitization the needs and situations faced by their businesses.
Therefore, we are going to analyze what regulatory changes are being considered by the British Government in the insurance sector and assess what impact they may have in relation to the management of insurance such as Mobile Terminals. Delonia specializes in the management of these insurances, providing technological support for the processing of claims through a global management platform. Let’s take a look at the scope of these changes, which are in line with what is being done in the European Union.
Regulatory developments in the United Kingdom are led by the Regulation and Innovation Office (RIO). Regulation and Innovation Office (RIO) together with the Financial Conduct Authority (FCA).
The changes driven in 2024 have taken into account several elements:
- The United Kingdom’s exit from the European Union, which brings with it changes in solvency, distribution and supervision to which it is necessary to adapt.
- Technological evolution and the spread of artificial intelligence. The use of AI and the analysis of huge amounts of data implies an important responsibility in terms of data protection and transparency.
- The need to adapt to emerging risks. Tighter cybersecurity requirements have been imposed on insurers to minimize the consequences of increasingly sophisticated cyberattacks.
- Fraud control as a cornerstone to reduce costs in insurance companies. This improves the profit margin, sometimes narrow, and leads to a reduction in premiums for the end customer.
Risk analysis
The Digital Information and Smart Data Bill (DISDB) for insurers enables real-time access to customer data, which could revolutionize risk assessment, claims processing and customer service. The aim is to give policyholders control over their data while allowing insurers to use it to provide a more personalized service.
For example, in the management of mobile device insurance, detailed knowledge of usage patterns can enable premiums and services to be tailored. Broader access to the data set, enriched with complementary information, could help insurers to better identify risks specific to portable devices, detect patterns linked to frequent damage claims or theft hotspots. This would lead to more accurate pricing of policies and better strategies to minimize claims expense.
Cybersecurity
The Cyber Security and Resilience Bill focuses on improving the ability to prevent and respond to cyber threats, which will require insurers to take on more stringent compliance requirements.
Given the importance of the insurance industry in the economy of Western countries and the fact that the industry handles a lot of data, both from private and corporate customers. A potential attack can involve everything from reputational damage to the disruption of critical services.
This is what has prompted the British Government to establish a stricter regulatory framework in aspects such as: the protection of personal data, incident management with incident detection and notification procedures, and the obligation for insurers to report cybersecurity incidents affecting their systems without delay. The security requirements for external service providers, who have to meet very high standards in order to be able to provide technological support to insurance companies, are becoming more demanding.
Fraud prevention
The British Government has made the fight against insurance fraud a priority through initiatives such as the Insurance Sector Fraud Charter which takes into account, among others, three of the most common elements of insurance fraud:
- Simulating claims: inventing an accident or damage with a loss that has not actually occurred.
- Magnify damages: increase the value of losses so that the amount claimed is greater than the actual loss incurred.
- Falsifying supporting documentation: submitting fraudulent documentation supporting the facts of the declared loss.
The standard is committed to improving data sharing across the industry. Greater collaboration between insurers, technology platforms and regulators will facilitate real-time fraud detection. This is critical for insurers of mobile devices, which face high volumes of claims and an increased risk of fraud. As fraudsters operate in different sectors, this collaborative approach enables the detection of suspicious patterns and identification of potential fraudsters, providing a more effective response.
The regulatory regulations being made in the UK do not differ in substance from what is happening in the EU. There is a need for a robust but flexible regulatory framework to address the challenges and risks in the sector. Use new technologies to reduce risks and improve profit margins, while protecting the customer.
Delonia’ s consulting team is already applying artificial intelligence technologies in different projects, not only to automate processes, but also to reduce fraud and increase risk control, all while taking care of data protection and cybersecurity of the systems involved. One final thought, those insurers operating in the UK market and also in the European Union will have to comply with two regulatory frameworks that are equivalent in substance but different in nuances. NB.
We are grateful to Orla Thornley for the work she has done on the new regulation on mobile handset insurance in the UK, which has been very helpful in developing this content.
