FRANCE Law and Practice Contributed by: Sylvain Clavé and Germain Chaux, Clavé Avocat
8. Insurtech 8.1 Underwriting Processes
found and continuously updated understanding of evolving EU and French financial regulations (in par - ticular AML/CFT, MiFID II/MiFIR, MAR, PSD2/PSD3, CRD/CRR, SFDR and related ESG disclosure frame - works) in order to accurately address their clients’ compliance needs and to avoid creating regulatory breaches for supervised entities. In addition, where their tools are embedded in the core processes of regulated institutions (eg, client onboard - ing, transaction monitoring, trade surveillance, regula - tory reporting), regtech providers are often treated in practice as critical or important outsourcing providers and must comply, via contract, with stringent require - ments on governance, information security, business continuity, audit and access rights imposed by the ACPR/AMF outsourcing and cloud guidelines. Moreover, certain regtech providers may fall within the scope of DORA as critical ICT third-party service providers, in which case they will be subject to direct EU-level oversight and enhanced obligations regard - ing ICT risk management, resilience testing, incident reporting and co-operation with competent authori - ties. 9.2 Contractual Terms to Ensure Performance and Accuracy A contract between a regtech provider and a regulated entity is not, as such, subject to a dedicated regula - tory regime. Its legal qualification (software licence, SaaS, services agreement, outsourcing, cloud, etc) determines the applicable rules, in particular where the arrangement falls within the scope of the EBA Guidelines on outsourcing, the ESMA guidelines or the DORA framework. If the agreement is qualified as an outsourcing con - tract – especially where the regtech solution sup - ports a critical or important function – the regulated entity must, prior to signing, carry out and document thorough due diligence on the provider (financial soundness, technical and organisational capabilities, information security, business continuity, regulatory expertise, subcontracting chain, location of data and processing, etc). The contract should then include detailed service level agreements (SLAs), incident management and reporting procedures, data protec -
Underwriting processes used by insurtech companies must comply with the French Insurance Code, which provides substantive and formal requirements to ensure validity of the insurance policy. This process is heavily influenced by the Insurance Distribution Direc - tive (IDD), requiring firms to conduct a “demands and needs” test to ensure product suitability before any signature, ensuring that the client subscribes to the policy with full knowledge of its terms and implica - tions. As most transactions occur online, non-professional policyholders are protected by consumer law, particu - larly regarding cooling-off rights and distance market - ing regulations. Furthermore, automated underwriting and AI-driven risk assessments are strictly governed by the GDPR, ensuring transparency and the right to human inter - vention when applicable. 8.2 Treatment of Different Types of Insurance Each category of insurance – such as life, annuities, and property and casualty (P&C) – is governed by its own specific legal framework and technical rules under the French Insurance Code. While the ACPR maintains a consistent level of rigorous oversight across the entire sector, industry participants must tailor their operations to the unique risks of each class. Regtech providers are not, as such, subject to a dedicated regulatory status under French law. They typically offer technology-driven compliance support services (reporting, transaction monitoring, KYC/AML tools, sanctions screening, transaction filtering, regu - latory reporting dashboards, etc), which, in principle, do not constitute regulated investment, banking or payment services. However, regtech providers are subject to significant indirect regulatory pressure: they must have a pro - 9. Regtech 9.1 Regulation of Regtech Providers
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