Recent regulatory developments of interest to insurers and their intermediaries. Includes FCA update on COVID-19 business interruption insurance test case and EIOPA discussion paper on insurance value chain and new business models arising from digitalisation.

Contents

• COVID-19: FCA update on business interruption insurance test case
• Insurance value chain and new business models arising from digitalisation: EIOPA discussion paper

COVID-19: FCA update on business interruption insurance test case

The UK Financial Conduct Authority (FCA) has published an update on its High Court test case concerning business interruption (BI) insurance. The FCA informs that it has started the proceedings, and publishes the following documents:

• the claim form;
• the particulars of claim;
• a representative sample of policy wordings;
• the assumed facts;
• questions for determination by the court;
• an issues matrix; and
• an updated list of affected insurers and BI policy wordings they use.

The FCA also explains how it has engaged with policyholders and other stakeholders since 1 June 2020 and publishes the following documents relating to its application that the test case be heard urgently, and as part of the Financial Markets Test Case Scheme (which is a scheme for financial claims raising issues of general importance that require immediate court guidance):

• the application notice
• a witness statement; and
• a draft order.

The first case management conference before a Judge is expected to take place on 16 June 2020. The Judge will be invited to consider the FCA's application for expedition and admission to the Financial Markets Test Case Scheme, fix the timetable for the case and deal with other procedural matters. The FCA intends to ask the Judge to agree to live-stream the hearing.

The FCA expects to issue a further invitation to policyholders and other stakeholders to provide comments shortly after 23 June 2020, when the insurer parties in the test case file their defences.

The FCA notes that it has updated its Policyholder Engagement Statement, including to refer to the FCA's privacy notice for information on how it handles any personal data sent to it.

Insurance value chain and new business models arising from digitalisation: EIOPA discussion paper

EIOPA has published a discussion paper on the (re)insurance value chain and new business models arising from digitalisation. EIOPA notes that, among broader trends, influencing business models are changes in value-chain and group structures; increased outsourcing of multiple functions and processes and enhanced use of third party services; and insurance platforms and ecosystems. Therefore, the aim of EIOPA's consultation is to get a better picture on possible fragmentation of the EU's insurance value chain and supervisory challenges related to that, in order to plan for next steps. In this regard, possible areas for further work that EIOPA highlights include:

• more specific analysis of possible regulatory responses to third parties in the value chain;
• a follow-up study focusing on the impact of platforms and ecosystems and their practical supervision (licensing, outsourcing, consumer protection, product oversight and governance rules), including the application of the EU law and possible gaps;
• adapting disclosures and advice requirements to the digital world, based on an assessment of customers' capabilities and new behaviour patterns and ways of providing information and advice; and
• further analyse broader measures that might underpin sound digital markets in insurance and insurance-related data.

Feedback on the discussion paper can be submitted until 7 September 2020.

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