The European Insurance and Occupational Pensions Authority (EIOPA) published today a report in which it analyses the level of digitalisation in the European insurance sector. The findings of the report – based on responses to EIOPA’s 2023 Digitalisation Market Monitoring Survey and insights from a dedicated Eurobarometer poll – show a broad spectrum of practices in the market and point to substantial differences in the digital readiness of individual insurers.
Digitalisation is increasingly affecting the way (re)insurance products and services are designed, developed and distributed in the EU. Increasing data flows in today’s digital economy and technological advancements such as artificial intelligence (AI), blockchain and the Internet of Things (IoT) offer wide-ranging opportunities to insurance undertakings, distributors and customers.
Still, innovative digital solutions can bring disruption and new challenges, and require adjustment and development in regulation and supervision. Given the high number of initiatives being deployed and the speed of developments, monitoring their impact on the market is key for EIOPA and national supervisors.
To better understand the dynamics, opportunities and risks associated with digitalisation in the European insurance sector, EIOPA launched a market-wide monitoring survey in 2023.
This report presents the results of this market monitoring exercise together with insights from a Eurobarometer survey on customers’ attitudes to digitalisation.
Key findings:
- The level of digitalisation among European insurers is varied and, in most cases, still at an early stage.
- Digital-only distribution channels still lag well behind physical or hybrid ones. This is especially true for life insurance products where consumer prefer in-person meetings even though online tools are also used to compare products or get more information about certain offers.
- Phone calls, emails and face-to-face meetings are the most popular communication channels for the moment, but the use of chatbots is expected to rise significantly, not least of all due to the emergence of generative AI.
- Most insurers are active on social media and use this channel to interact with customers and to launch marketing and educations campaigns – on occasion in collaboration with influencers.
- Most insurers have active commercial relationships with BigTech firms. Nearly 80% of the respondents use BigTech companies for cloud storage services.
- Artificial intelligence is already used by 50% of the respondents in non-life insurance and 24% in life insurance. Most current solutions have been developed in-house for simpler tasks with more explainable algorithms that retain human oversight. The expectation is that the use of AI will considerably increase in the years to come.
- Other technologies such as the Internet of Things, blockchain and parametric insurance are currently only used by a small number of insurers.
- Insurers reported growth in the cyber insurance market over the past two years even though many cyber insurance products still exclude certain risks.
- Insurers see acquiring adequate talent and skills as central to a successful digital transformation. Lack of such talent and skills is seen as a major barrier to implementing digital solutions.
The findings of the report will support EIOPA in evaluating the risks and benefits of digitalisation for the market and customers, assessing and designing regulatory measures, improving supervisory convergence and oversight, and ensuring that stakeholders can reap the benefits of digitalisation while protecting customers and safeguarding financial stability.