Insurtech corporations proceed to increase their attain into the Latin America market, significantly in Brazil, Mexico, and Peru. Insurtech, outlined as the mixture of insurance coverage and expertise, develops and leverages new digital instruments to optimize the insurance coverage enterprise. Latin America affords a pretty surroundings for insurtech corporations to develop revolutionary enterprise models together with new distribution channels and methods to check insurance coverage merchandise and supply providers to insurance coverage corporations. The truth that the insurance coverage business in Latin America is very regulated, mixed with the absence of regulatory frameworks particular to insurtech, explains, partly, why insurtech has skilled sluggish progress to this point, representing roughly solely 6% of all start-up fintech corporations in Latin America. Recognizing insurtech’s potential advantages, insurance coverage regulators in Latin America have begun to discover the way to facilitate modernization of the insurance coverage sector by means of the usage of new digital applied sciences with out compromising shopper safety.
Brazil, the main insurtech market in Latin America, not too long ago provided a regulatory sandbox to a restricted variety of insurance coverage corporations supervised by the Brazil Insurance coverage Superintendent (SUSEP). The sandbox is designed to allow testing of recent services and products and to encourage growth of recent methods to offer conventional insurance coverage providers. SUSEP adopted Round No. 592 on August 26, 2019, authorizing “on demand” insurance coverage insurance policies, thus allowing issuance of insurance policies with versatile phrases affording coverages on a month-to-month, each day, and even hourly foundation. These “on demand” insurance coverage insurance policies are bought by digital means, thus permitting insureds to show coverages on and off. This has opened the door to fundamental insurance coverage for cell gadgets, bikes, bikes, and different private valuables corresponding to smartphones and tablets. These regulatory modifications replicate SUSEP’s intent to adapt to the rising use of good telephones by customers and to usher within the digital insurance coverage period, which, in flip, hopefully results in extra reasonably priced merchandise.
Though not particular to insurtech, Mexico adopted a regulation to control monetary expertise corporations (Fintech Regulation) on March 9, 2018. The Fintech Regulation was designed basically to advertise monetary expertise models corresponding to crowdfunding or digital funds, or digital property corresponding to bitcoins. Whereas it predates adoption of the USMCA, the Fintech Regulation means that Mexico was anticipating USMCA necessities with respect to the dealing with and sharing of buyer knowledge, prohibiting discrimination towards international fintech corporations. The Fintech Regulation would additionally allow Mexican fintech corporations to offer providers in different nations. The USMCA is designed to reinforce and facilitate the providing of insurance coverage providers by licensed suppliers, which, in flip, doubtless would promote the insurtech business by making it simpler for corporations to acquire approval for brand new insurance coverage traces (besides private and obligatory insurance coverage).
The Fintech Regulation demonstrates that legislators in Mexico may be versatile in devising future rules to deal with insurtech in an analogous method. Till then, insurtech corporations are topic to the prevailing authorized regime, the Regulation of Insurance coverage Firms and Bonds (Mexican Insurance coverage Regulation), and Laws and Circulars issued by the Nationwide Fee of Insurance coverage and Bonds (CNSF). Article 214 of the Mexican Insurance coverage Regulation, for instance, particularly permits insurance coverage operations and brokering actions to be supplied by digital means.
Though Peru has not adopted an insurtech regulation, the Banking and Insurance coverage Superintendent (SBS) has promulgated rules that handle the sale of insurance coverage merchandise by digital means. The Advertising of Insurance coverage Merchandise Laws, adopted by Decision SBS No. 1121-2017 (“Marketing Regulations”), permits insurance coverage corporations to advertise, supply, and promote merchandise by telephone, web, or different distance (i.e., quite than “in person”) methods, together with digital advertising and marketing by means of social media. The Advertising Laws additionally allow operation of digital insurance coverage coverage price comparability methods. Likewise, the Supervision and Management of Insurance coverage Intermediaries Laws, adopted by Decision SBS 809-2019, permits insurance coverage brokers to make use of distance communication methods (i.e., telephone, web, functions) to supply and promote insurance coverage merchandise on prior discover to the SBS. Insurance coverage corporations and insurance coverage intermediaries utilizing these digital instruments should assure that the data supplied to potential policyholders complies with the safety, confidentiality, and transparency rules supplied within the Common Regulation for the Monetary and Insurance coverage Techniques and the Natural Regulation for the Superintendent of Banking and Insurance coverage for the sale of insurance coverage merchandise.
The SBS is engaged on a proposal to amend the Advertising Laws to permit the advertising and marketing of insurance coverage merchandise by means of “marketers” or “bancassurance” by conventional or digital means. Entrepreneurs are people or corporations contracted by insurance coverage corporations to facilitate the sale of insurance coverage merchandise. By advantage of the advertising and marketing settlement between the entrepreneurs and the insurance coverage corporations, entrepreneurs turn into representatives of the insurance coverage corporations in reference to the sale of insurance coverage merchandise.
Whereas insurtech would facilitate progress within the insurance coverage market in quite a few nations in Latin America with rising insurance coverage penetration, corresponding to Colombia, Argentina, Ecuador, Panama, Costa Rica, and Chile, these nations haven’t but adopted legal guidelines or rules addressing insurtech. Thus, in these markets, start-up insurtech and expertise corporations are topic to current laws governing insurance coverage corporations and insurance coverage intermediaries in reference to their operations. The absence of particular rules, nevertheless, has not prevented corporations from venturing into revolutionary insurance coverage schemes together with new distribution channels, price comparability instruments, and aggregation strategies in these nations. Clearly, laws will not be far behind.
To foster insurtech growth, the Worldwide Affiliation of Insurance coverage Supervisors (IAIS) has established working teams as platforms for the exchange of knowledge and sharing of expertise on this space, however ithas not but issued suggestions relating to insurtech regulation. IAIS tips would undoubtedly encourage regulators to expedite acceptable rules governing insurtech. This, in flip, would promote and defend this new business, which is encountering very receptive markets in Latin America.
Republished with permission from the ABA Enterprise Regulation Part.