The impact of Insurtech on the insurance sector analysed at the Pérez-Llorca/IE Chair

Pérez-Llorca and IE Law School organised a new session of their Chair on Commercial Law in collaboration with the Association of Young Insurance Professionals (AJPS), in which they analysed the impact of Insurtech (insurance start-ups that use new technologies to create and offer innovative products and services to their clients in the insurance sector) as well as the legal challenges faced by this new disruptive business model.

Joaquín Ruiz Echauri, Insurance and Reinsurance partner at Pérez-Llorca, moderated the session, which featured Pedro Fernández, Corporate partner at Pérez-Llorca and Venture Capital expert; Andy Ramos, Intellectual Property and Technology partner at Pérez-Llorca; Rafael Fernández, Insurance and Reinsurance counsel at Pérez-Llorca; Andrea Sánchez, Intellectual Property and Technology lawyer at Pérez-Llorca; Andrés Quiles, President AJPS and Digitalisation Director of Abanca de Seguros Generales; Nacho Travesi, Co-Founder and CSO of Cobee; Jaime Sánchez, Insurance Director of Cobee and member of the AJPS Board of Directors; Pablo Collado, Co-Founder and CEO of IMeureka; Rafael Zurera, Co-Founder and COO of IMeureka; and Antonio Morales, Co-Founder and CEO of Gocleer.

Joaquín Ruiz Echauri and Andrés Quiles introduced the topic for discussion and were followed by Rafael Fernández, who explained how Insurtechs and their innovative technologies are being framed within the traditional insurance distribution system in Spain. Likewise, the Pérez-Llorca counsel commented on some of the most disruptive trends and technologies that are emerging in the insurance sector, such as on-demand insurance, which is characterised by offering high flexibility to the insured, and peer-to-peer (P2P) insurance, which is establishing itself as a new collaborative insurance formula with reduced costs.

From a regulatory point of view, Fernández covered the most innovative aspects established by Royal Decree-law 3/2020, which transposes the European Insurance Distribution Directive into Spanish law, specifically Law 7/2020, better known as the Sandbox Law, which was approved for the digital transformation of the financial system, as well as the Draft Law on Start-ups, which will simplify procedures to incorporate companies and provide other labour and tax advantages. In addition, he analysed some EU-level regulatory developments, highlighting the guidelines on outsourcing to cloud service providers issued by EIOPA.

Andrea Sánchez, on the other hand, focused on analysing the impact of the technologies used by Insurtechs in the field of privacy. Specifically, the Pérez-Llorca lawyer explained the main value of wearable devices for companies. They permit information from various sources to be stored and monitored and allow a larger volume of data to be analysed, thus enabling a better understanding and profiling of user behaviour. In the case of policyholders, based on these profiles, insurers can offer their potential customers more targeted services. Sánchez pointed out that the handling of this personal data entails a series of risks, such as predictive and quantitative damages. On quantitative damages, focusing on the frequency with which personal data is collected and processed, Sánchez said that “it is important that companies make responsible use of data and that the handling of this information is focused exclusively on the purposes that the company wants to accomplish for its clients”.

Andy Ramos continued the session by reflecting on the role of technology in the insurance sector and, in particular, on blockchain and smart legal contracts. The Pérez-Llorca partner explained that “the use of smart legal contracts provides a series of advantages such as flexibility and autonomy, but it is still an excessively complex and rigid system for a sector such as insurance, as it does not allow for exceptions”. In his experience, Ramos said that “the insurance sector is innovating not only with blockchain technology but, above all, in business models and process automation”.

From the perspective of start-ups and venture capital, Pedro Fernández analysed the characteristics of Insurtech within the entrepreneurial landscape, highlighting that these innovative companies require financing from their inception and throughout their trajectory for their development. He also explained the growth process for these companies from creation to a potential sale or IPO. Fernández also indicated that another trend marking the Insurtech sector is intrapreneurship, the creation of a start-up within a large corporation, where the company itself is responsible for providing the necessary funding to this new company or seeking external investors for it.

Finally, to close the event, a roundtable was held to learn about the success stories of three Insurtechs: Cobee, a platform for managing a company’s social benefits and flexible remuneration, including health insurance; IMeureka, the first insurance marketplace that connects all players in the insurance sector for better risk management; and Gocleer, which provides a digital platform for mobility insurance where the user is at the centre of the value proposition, which offers a single, comprehensive insurance policy for all modes of transport, such as cars, bicycles, motorbikes and scooters, in a single place. The founders and managers of these companies gave first-hand accounts of their experience as entrepreneurs and the legal challenges they have faced while they launched new technological methods in our country.