EU Member States Reach Agreement on Financial Data Access Framework (FIDA): Key Open Insurance Insights

In a major step toward advancing open finance in the European Union, Member States have agreed on their position regarding the Framework for Financial Data Access (FIDA).

The Council broadly supports the European Commission’s initial proposal, emphasizing a gradual, step-by-step implementation.

This agreement lays the foundation for data-sharing across financial sectors, including insurance, and clarifies its scope by defining specific data sets, products, and sectors covered, along with a timeline for the data-sharing obligations to take effect.

Below are key highlights from an insurance perspective.

Key Implications for Open Insurance

Alignment with the Insurance Distribution Directive (IDD)

A significant addition is the integration of the IDD’s suitability and appropriateness assessment, ensuring consistency with existing insurance regulations.

Exclusions and Opt-In Provisions

• Occupational Pensions: Excluded from the framework, though Member States may opt-in.
• Personal Injury Data: Data related to personal injury claims in non-life insurance is excluded.
• Reinsurers: Reinsurers are excluded from the scope.

“Grandfathering” Clause for Historical Data

To address concerns about legacy data, the framework introduces a “grandfathering” clause, limiting access to customer data from the past 10 years unless the data is already digitized.

National Pension Tracking Systems Exempt

Existing national pension tracking systems are explicitly excluded from the framework.

Definitions Clarified: Who Is the Customer, and What Is Customer Data?

• Customer Definition: In insurance, a “customer” refers to any natural or legal person using financial services, including insured persons or policyholders, but not third-party beneficiaries.
• Customer Data Definition: The framework emphasizes digital and transactional data while explicitly excluding confidential business information and trade secrets.

EIOPA Guidelines: Expanded Scope for Risk Assessment and Pricing

EIOPA guidelines should now apply to both life and non-life insurance products, focusing on risk assessment and pricing. They should include measures to prevent excessive data granularity, preserving the industry's core "risk-sharing" principle.

Implementation Timeline: When Will Open Insurance Start?

• Motor Insurance: Implementation begins 24 months after the regulation enters into force.
• Personal Pension Products: Begins 36 months post-enactment, covering Pan-European Pension Products (PEPPs) and Personal Pension Products.
• Remaining Insurance and Pensions: Full implementation across all insurance and pension sectors starts 48 months after the regulation’s entry into force.

Conclusion: What’s Next for Open Finance and Insurance?

The agreement on FIDA is a significant milestone in the EU’s open finance and open insurance journey. With this consensus, the Council is now ready to negotiate the final legislation with the European Parliament, which is expected to finalize its position soon. Trilogues are likely to begin by late January.

Once an agreement is reached, both institutions will need to formally adopt the legislation before it is published in the EU’s Official Journal and officially enters into force.

Want to understand how FIDA could impact your business or explore its practical implications? Contact here for expert insights on navigating the evolving landscape of open finance and insurance.