Shaping the Future: How Europe's New Policy Cycle Impacts InsurTech
The new European policy cycle officially began on December 1, 2024, as the European Commission’s new leadership took office. This is an opportune moment to take stock of the previous EU policy mandate and its implications for the InsurTech sector, as well as to look ahead at what the future may hold.
One of the central priorities of the previous Commission was A Europe Fit for the Digital Age.[1] The goal was to empower people with new technologies and make this Europe’s “Digital Decade.” Strengthening digital sovereignty and establishing EU standards—rather than following others—were key objectives, with a clear focus on data, technology, and infrastructure.
Naturally, the financial sector was profoundly impacted by this strategic agenda.
The Digital Finance Package and Its Impact on Insurance
In 2020, the European Commission introduced the digital finance package[2], including a comprehensive strategy for supporting the digital transformation of finance while managing its risks.
This strategy was accompanied by legislative proposals such as MiCA and the DLT Pilot Regime, which had less direct impact on the insurance industry. However, the Digital Operational Resilience Act (DORA)[3] was a significant development, directly affecting insurance companies and InsurTechs.
DORA aims to strengthen the IT security of financial entities, ensuring that Europe’s financial and insurance sector remains resilient during severe operational disruptions. It harmonizes rules on operational resilience across the sector, bringing a much-needed regulatory framework for managing ICT risks.
The European Data Strategy and Open Finance
Another cornerstone of the previous policy cycle was the European Data Strategy[4], which focused on putting people first in technology development while upholding European values and rights. Data is an essential resource for economic growth, innovation, and societal progress—especially for insurance, where data-driven insights fuel new business models.
Key regulations under this strategy included the Data Act, Digital Markets Act, Digital Services Act, Data Governance Act, and the European Single Access Point. More recently, the Financial Data Access (FIDA)[5] proposal has emerged as a crucial enabler of “open finance,” providing a framework for responsible access to customer data across financial services, including insurance and pensions.
The AI Act and Its Relevance to InsurTech
The AI Act[6] deserves particular attention. It aims to ensure a high level of protection for fundamental rights, health, and safety. The Act follows a risk-based approach, classifying AI systems into categories of unacceptable, high, limited, and minimal risk.
In the insurance sector, AI systems used for risk assessment and pricing in life and health insurance are classified as high-risk. The AI Act establishes rigorous requirements for providers and users of these high-risk AI systems, complementing existing insurance sector regulations.
For the remaining AI systems that are not considered to be high-risk, the AI Act establishes some minimum transparency requirements, the need to promote staff AI literacy, and the development of voluntary codes of conduct.
Reflections on the Policy Cycle
This policy cycle has been intense, with numerous initiatives reflecting the rapid pace of technological innovation. The phrase “Change has never been so quick, yet it will never be so slow again” encapsulates this well, especially when considering the recent surge in AI adoption, including generative AI and agentic AI.
The cycle has also been challenging. Policymakers and supervisors have struggled to keep pace with innovation while ensuring balanced, forward-looking regulation that does not stifle progress. Market participants, meanwhile, have had to adapt to a complex new regulatory landscape.
The transition to a new cycle provides an opportunity to reflect on these challenges and chart a more cohesive path forward.
Future Considerations for Policy and Regulation
We are likely to see continued cross-sectoral policy initiatives, such as we have seen AI Act, DORA and FIDA, which will require early engagement from the insurance and InsurTech communities.
The focus will likely shift to implementation, as DORA becomes applicable in January 2025, followed by the AI Act’s first provisions in February 2025. Insurance institutions will need to manage parallel requirements under both DORA and the AI Act, especially concerning ICT risks in AI systems.
There are still open questions about the AI Act’s implementation. In the insurance sector, two sets of requirements apply: the AI Act and sector-specific legislation. Ensuring these frameworks work together effectively, with an emphasis on proportionality and the unique aspects of the insurance industry, will be critical.
New Commission Priorities
The first month of the new Commission offers hints about its future priorities. Europe faces pressing challenges, such as rising living costs, housing shortages, and broader societal, environmental, and economic shifts. These are intensified by geopolitical instability and generational change.
The Commission has set ambitious goals for 2024–2029 and beyond[7], aiming to create a faster, simpler, and more united Union. These goals will likely guide the next political term, just as A Europe Fit for the Digital Age shaped the previous one.
Key initiatives include developing a European Savings and Investments Union to leverage private savings for broader EU objectives. The Commission also plans to review the regulatory framework to ensure that European companies and start-ups can finance their growth within Europe, which could unlock more capital for innovation in insurance and financial services. Another highlighted initiative aims to make business easier and faster by, for example, proposing a new EU-wide legal status to help innovative companies grow.
Additionally, a Digital Fairness Act may be introduced to address unethical digital practices like dark patterns, influencer marketing, and online profiling—areas that could impact the insurance sector, despite existing regulations in sector-specific legislation and horizontal frameworks like the Consumer Rights Directive.
Conclusion: Turning Challenges into Opportunities
As the European Union and the insurance industry navigate a volatile landscape marked by high inflation, uncertain interest rates, and a challenging funding environment for InsurTechs, these challenges also present opportunities for innovation.
Similarly, new regulations offer a chance to reassess existing practices and drive progress. Compliance can serve as a catalyst for innovation, prompting companies to ask what they are doing, how they are doing it, and why.
That said, it is essential to remain demanding toward decision-makers. Practical concerns and constructive feedback should be raised to improve regulatory outcomes.
What is clear is that collaboration between innovators, regulators, policymakers, academia, and consumer representatives is more important than ever. Facing the challenges ahead will require a united effort to ensure a balanced approach that fosters both innovation and resilience.
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[1] Priorities 2019-2024 - European Commission
[2] Digital finance package - European Commission
[3] Regulation - 2022/2554 - EN - DORA - EUR-Lex
[4] European data strategy - European Commission
[5] EUR-Lex - 52023PC0360 - EN - EUR-Lex
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