Insurtech Australia endorses CDR extension to insurance

Insurtech Australia has endorsed a government plan to extend the Consumer Data Right (CDR) regime to the insurance industry, according to insurancenews.com.au.

CDR was introduced first to the banking industry in July 2020 – more commonly known as Open Banking – with energy next, followed by other sectors such as telecommunications and insurance. It aims to give consumers greater say over the access and use of their personal information by businesses and may allow consumers to access specified data held about them by insurers, and to authorise the secure disclosure of that data to third parties.

Earlier in 2021, the Open Insurance Working Group was established – led by The Fold Legal and Insurtech Australia – to represent insurtechs in the early stages of policy development as the CDR is expanded to life and general insurance. A Treasury consultation into the ‘Inquiry into Future Directions for the CDR’ released in February 2021 focused on banking and Insurtech Australia says there are ‘parallels and trends which are common to general and life insurance’. Insurtech Australia – which represents 70 insurtechs and 28 corporate partners – says its members are ‘most interested in how CDR will support the data economy and empower customers to better use and share their data as between incumbents and innovators’. The submission comprehensively details the use of data in insurance, saying data is ‘powerful in the insurance sector because of the actuarial application of the data and its ability to affect pricing and risk decisioning’.

Data is not openly available to insurtechs or new entrants to assist in pricing or rating and understanding risk. Insurtech Australia says data protection is a key consideration as protections under the Privacy Act are often relied upon by incumbent insurers as a basis to lawfully refuse to share data with insurtechs or other service providers. ‘One of the areas where Insurtech Australia would like to see positive developments for insurance consumers is in allowing insurtechs to access and use a particular customer’s data with the permission of the customer,’ it says.

That would allow the customer to compare products, features, pricing, and other criteria and assess alternative insurance offers reliably in the context of their personal insurance history and current requirements. Insurtech Australia endorsed providing insurance customers control over their data transfer and use in switching policies and price comparison, encouraging greater competition and choice across insurance, allowing trusted advisers and brokers to operate for the benefit of their customers and lowering barriers to entry.