Online selling - Regulatory framework

Observing the latest regulatory developments on insurance digital distribution, it is notable that the Belgian regulator has not made a specific distinction between online distribution and “traditional” distribution. When carrying out online distribution, the legislation on distance financial contract and the 2002 act on information society services and electronic commerce must be still applicable.

Digital distribution of insurance products is not subject to any specific regulation in France, and is therefore governed by:

• the general provisions of the French insurance code, ruling on insurance distribution and implementing the Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (“IDD”) in France; and
• additionally, legal provisions provided by the legal framework given by French consumer code, implementing the 2002/65/EC Directive on the distance marketing of consumer financial services apply to online intermediation activities.

Italian authorities have developed a strong focus on in the Insurtech industry. The Istituto per la Vigilanza sulle Assicurazioni (“IVASS”) is in fact one of the players in the “regulatory sandbox”. This is a project implemented by the Ministry of Economy and Finance, in collaboration with the Bank of Italy and the Commissione Nazionale per le Soietá e la Bolsa, public authority responsible for regulating the Italian financial markets (“CONSOB”), coming into force via the Decree of the Ministry of Economy and Finance No. 100 of 30 April 2021 (“MEF Implementing Decree”). It is a controlled environment in which traditional and Fintech / Insurtech operators will be able to test technologically innovative products and services, benefiting from a simplified transitional regime. Through the sandbox, IVASS will be able to observe the dynamics of technological development and identify the most appropriate and effective regulatory measures to facilitate the development of Insurtech, reducing the spread of potential risks associated with these activities.

IVASS also took some regulatory actions in 2021 which affected remote distribution players. For example, as of the second quarter of this year, intermediaries operating under Freedom of Services (“FOS”) can no longer register their collaborators in the Register of Insurance Intermediaries (“RUI”). IVASS has clarified that the presence of collaborators in Italy is, in fact, considered to be a typical element of the different FOS regime. This means that if EU intermediaries, in addition to distributing purely online, wish to engage external collaborators in Italy, they will need to establish a branch office and identify a responsible person.

Currently there is no specific regulation regarding insurance digital distribution and the rules foreseen for the traditional insurance distribution Law no. 7/2019 and the Regulatory Rule nº 13/2020-R of the Autoridade de Supervisão de Seguros e Fundos de Pensões (“ASF’s”), the national supervisory authority in Portugal, should apply.

The ASF has demonstrated an open and receptive approach to technology and innovation in the insurance market. For example, ASF together with Bank of Portugal (the “central bank of Portugal”), Comissão do Mercado de Valores Mobiliários, Portuguese Securities Market Commission. (“CMVM”) (and Portugal Fintech Association launched the “Portugal FinLab”, a platform that aims to develop the FinTech, Insurtech and RegTech network in Portugal. It is designed to establish efficient communication channels between innovative start-ups/companies and regulators with a view towards the implementation of innovative projects. ASF considers that such a platform has major importance for the supervisory authorities as it allows them to monitor and be aware of new digital challenges, to protect consumers and to anticipate regulatory issues that may arise.

The Dutch regulator has not made a specific distinction between online/digital distribution and ''traditional'' distribution of insurance products. In both cases the requirements following from the European Insurance Distribution Directive do apply, which is mainly implemented in the Netherlands into the Dutch Financial Supervision Act (in Dutch: ''Wet op het financieel toezicht'' – WFT) and the lower rules and regulations promulgated thereunder.
In addition, the insurance related provisions following from Book 7 of the Dutch Civil Code (in Dutch: “Burgerlijk Wetboek”) do apply to both online/digital distribution and ''traditional'' distribution of insurance products.
Nevertheless, when carrying out online/digital distribution activities, the following complementary legislation must be taken into consideration:

• certain provisions following from Book 6 of the Dutch Civil Code on distant and off-premises agreements (consumer rights);
• certain provisions following from the Decree on Conduct of Business Supervision of Financial Undertakings (in Dutch: Besluit Gedragstoezicht financiële ondernemingen) dealing with distance insurance agreements.

The existing Ukrainian legislation does not regulate insurance digital distribution, but distribution is not prohibited. For digital distribution, it is important to ensure that insurers and their counterparties comply with general rules for distribution of insurances (the Law of the Ukraine “On Insurance”, adopted on 7 March 1996 under No. 85/96-ВР) and general requirements of Ukrainian law when entering into insurance agreements (e.g., for proper execution by electronic signature).
In addition, the National Bank of Ukraine, as regulator, has recently declared that digitalisation of financial markets will be one of its priorities, which implies further regulatory developments in this field. There are several expectations regarding the introduction of new regulations on insurance digital distribution in the near future.

The United Kingdom (UK) regulator has not made a specific distinction between online distribution and “traditional” distribution. The UK regulator’s approach tends to be technology neutral, focussing instead on delivering good customer outcomes.
The rules concerning insurance distribution are primarily set out in the Insurance Conduct of Business Sourcebook (“ICOBS”) sourcebook of the Financial Conduct Authority, national supervisor authority in the United Kingdom (“FCA”) Handbook, which incorporates certain requirements concerning distance marketing and e-commerce activity. Firms should also have regard to the Financial Services and Markets Act 2000 (Financial Promotion). Order 2005 and the Consumer Rights Act 2015.

As regards recent regulatory developments, the UK regulator has, from 1 January 2022, introduced rules concerning the pricing of new and renewing insurance products and the operation of renewals. Firms should also be aware of the forthcoming Consumer Duty which will be implemented in 2023 require retail firms to: (i) consider what outcomes customers should expect from products and services; (ii) act to enable such outcomes; and (iii) assess the effectiveness of their actions.
It should be noted that the UK regulator takes an open and proactive approach to the use of new technologies and has launched an Innovation Hub which seeks to encourage and support innovation in financial services. Firms offering innovative products and/or services may have access to a range of services from the UK regulator, including access to a digital sandbox, a regulatory sandbox, a specialist automated advice unit, and the ability to undertake cross-border testing.

Insurance distribution is regulated by Royal Legislative Decree, 3/2020, on urgent measures, which transposes into Spanish law various European Union directives in the field of public procurement in certain sectors; private insurance; pension plans and funds; taxation and tax litigation.

Nevertheless, when carrying out online distribution the following complementary legislation must be taken into consideration:

• Law 22/2007 of 11 July 2007 on distance marketing of consumer financial services;
• Royal Legislative Decree 1/2007, approving the revised text of the General Law for the Defence of Consumers and Users and other complementary laws;
• Law 34/2002 2002 on information society services and electronic commerce.