PORTUGAL Law and Practice Contributed by: Leonor Futscher de Deus, Broseta Abogados, SLP
10. Insurtech 10.1 Insurtech Developments
11. Emerging Risks and New Products 11.1 Emerging Risks Affecting the Insurance Market In Portugal, the emerging risks that presently affect the insurance market are as follows. Cybersecurity The high connectivity of companies and populations across generations ‒ combined with working remotely (people connecting to their company from outside) ‒ has increased the risk of cyber-attacks, which could potentially lead to more data theft or blocking. The market for cyber-insurance is expanding in Portugal. Insurers have been progressively adapting their offers and presenting a wider choice to companies. In terms of regulatory response, the ASF created a systematic reporting obligation regarding cyber-risks and cyber-incidents aimed at collecting data for the purposes of creating a historical aggregated record and for assessing the impact of cyber-risks within the scope of insurance activity. Catastrophes and Climate Change Statistics show that the number and severity of natu- ral catastrophes have been increasing throughout the years. One of the concerns of the insurance sector relates to reducing the “protection gap”, which results from the difference between the economic losses aris- ing from natural catastrophes and the compensation paid by the insurer under the insurance policies in force. To reduce this gap, the industry collaborates with several entities in order to increase the offer of insurance products with a sustainability-related profile and to make this type of insurance more competitive and available to a wider part of the market. Demographic Ageing and Social and Health Care These themes raise some concerns in terms of risk mutualisation. They are not a new topic and the sector is already aware that the offer of products will have to be adapted so as to gradually become an effective alternative to the public social protection system – while still maintaining affordable pricing – for several population sectors, age groups and layers that typi- cally do not buy insurance.
Insurtech plays an important role in the insurance sec- tor. Several insurers have been establishing partner- ships with technology companies aiming to improve their processes and business models and become more competitive. Telematics insurance is increasingly gaining impor- tance. Telematics is used to collect information about the insured’s habits. It allows insurers to better identify behaviours that might be relevant in case of a claim. In return, the policyholder/insured is offered rewards or cost savings on their policy for “good behaviour”. Whether by means of telematics devices or mobile apps, where the policyholder/insured provides per- sonal information to the insurer about preferences or habits, telematics insurances are getting stronger ‒ specifically, in car and health insurances. Telematics insurance enables insurers to offer lower prices and tailor-made products. Insurers are also resorting to AI to automate sev- eral operations and administrative tasks ‒ namely, in underwriting, pricing and claims functions. This speeds up operations, reduces costs and offers new valued products. 10.2 Regulatory Response The ASF is very active when it comes to insurtech issues, being aware of the market trends and partici- pating in several insurtech initiatives and events. In terms of regulatory response, the ASF issued rules applicable to insurers and pension fund management entities establishing requirements on security and governance of information and communication tech- nologies and on outsourcing to cloud service provid- ers. The ASF also supports new technologies. Insurance distance selling, whether online or by phone, is an established and well accepted practice in the Portu- guese market.
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