Online selling platforms are new insurance intermediaries: report

The report aims to be a point of reference for government and industry discussion on insurtech.

Philippine insurer Pru Life UK together with Romulo, one of the country’s top law firms, has published the “Driving Broader Insurance Access through InsurTech.” report, an independent policy paper comissioned to underline the importance of insurtech in insurance penetration.

The paper talks about how the Insurance Commission (IC) has been adapting to societal and technological changes by issuing regulations on the electronic commerce of insurance products since 2014, and by permitting the remote selling of insurance products during the COVID-19 pandemic. 

However, there remains a degree of regulatory uncertainty in the use of insurance technologies by insurers, leading to regulatory approvals on a case-to-case basis and under a regulatory sandbox framework.

The report said that insurers see the potential of online selling platforms as a new mode of distributing insurance products. They are viewed as a new type of insurance intermediary that differs from traditional insurance intermediaries by playing a passive role in the perfection of an insurance contract. The current regulatory framework supports the electronic commerce of insurance products allowing for online selling platforms as insurance intermediaries.

Online shopping platforms

Online shopping platforms are increasingly being considered as channels for insurance distribution. However, regulations from the IC in the Philippines prohibit intermediaries from approving insurance applications, which is an exclusive function of insurers. Nonetheless, the IC recognizes that "intermediaries" may cover actors in the insurance process other than insurance agents and brokers, including online insurance aggregators and online shopping platforms.

Under a three-tiered classification of intermediaries based on their knowledge of or involvement in the insurance process, online shopping platforms fall under the third tier as intermediaries that merely provide a platform connecting insurers and consumers for online distribution of insurance products, without providing advice or client servicing.

Therefore, online shopping platforms should be allowed to display insurance products on their platforms for marketing and product information purposes. The consumer can then reach the insurer through the platform to commence the insurance application process. At or towards the completion of the sale, the platform can also provide a channel for open communication between the insurer and the consumer.

Agreements between the online platform and the insurer will be screened by the IC. However, the online platforms themselves should not be required to register with or obtain a license from the IC, as they are not actively engaged in the insurance business.

The report said that to ensure consumer protection, the insurer and online platform should implement additional safeguards, such as "protection tools," for complex products requiring a higher degree of consumer protection because in the end, the insurer is responsible for statutory obligations, including anti-money laundering and counter-terrorism financing laws, whilst online platforms remain passive intermediaries.