Talking FiDA and Open Insurance in “Expertises” magazine
The European Commission continues its objective of giving individuals and organizations control over their data with a new proposal for the FiDA (Financial Data Access) regulation, which regulates the opening of financial data, including banking, insurance, and investment data. To achieve this, Brussels has learned from its legislative practice, especially from the PSD2 directive and open banking. It has introduced new concepts and granted more autonomy to stakeholders by allowing them to define the implementation of the future regulation. Nevertheless, this text, which mandates the opening of a large amount of data, raises concerns in the insurance and banking sectors. Anne-Sophie Morvan, head of business and legal affairs for a platform providing APIs for the banking and insurance sectors, explains what open finance entails within the FiDA framework and why it is causing so much apprehension.
In discussions about European data regulation, the Data Act, DGA, and the PSD2 directive (Payment Services Directive) are frequently mentioned, but much less attention is given to FiDA, the new framework for financial data access proposed by the European Commission on June 28th. Following the open banking regulations on the opening of banking data governed by the PSD2 directive, this new text forms the legislative basis for the implementation of open finance, encompassing open insurance on a European Union scale. Anne-Sophie Morvan, formerly a digital law specialist and currently the head of business and legal affairs at LUXHUB, an API platform for the banking and insurance sectors, and a member of the expert group on the European financial data space representing the Open Insurance Think Tank, is asked about the current state of financial and insurance data openness. As fintechs and insurtechs thrive, is openness progressing in both sectors?
Currently, we cannot really speak of data openness. In the absence of regulation, there is no obligation to make data available. Today, it is up to the market to decide whether or not to open up. Open finance encompasses open banking, open insurance, and open investment data. The PSD2 directive mandated the banking sector to open data on payment accounts, specifically current accounts. Data related to loans, savings, and held stocks are not included in the scope of open banking. With open finance, these data will be open. There has been no directive like PSD2 for the insurance sector. Of course, the General Data Protection Regulation (GDPR) imposes, to some extent, data portability and the right of access, but this does not necessarily translate into the provision of an API, an automated and continuously accessible interface.
Therefore, insurance companies can decide whether or not to do so. Today, some have implemented APIs, but they are mostly used as a means of distributing their products rather than providing data. For instance, an insurance company offering a flight cancellation insurance product may make it available via an API. Flight booking websites would then connect to this API, for example, to get an estimate of the insurance premium for a specific flight. This is not what we call opening up customer data.
Nevertheless, we see the emergence of insurtechs.
Yes, but they are developing more towards screen scraping, which is the automated extraction of data. Before open banking, if one wanted to have a consolidated view of all their accounts from one or more banks, they would turn to a third-party company, providing all their codes to access online banking. From my observations, some insurtechs offer these kinds of services. However, it is necessary for insurance companies to have an application or an online site for this to work.
The interview was conducted by Sylvie Rozenfeld and published in French. This teaser was translated into English.
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Source: expertises.info