Proposal for ePrivacy Regulation could hamper telematics insurance

Insurers’ ability to develop new products, such as telematics-based insurance, could be hampered by the ePrivacy Directive proposal, according to European insurance and reinsurance federation Insurance Europe.

According to consent management platform Cookiebot, ”the ePrivacy Regulation 2021 is a draft regulation from the EU Council which, if passed into law, will govern all electronic communication on publicly available services and networks from individuals inside the European Union, such as Facebook messages, texts, emails, SnapChats and all other popular electronic communications services.

”Though not a primary focus of the ePrivacy Regulation, cookies and trackers used on websites are also covered by the legislation and, like the GPDR already mandates, would require explicit consent from users in order to be activated on your website.”

The new regulation is intended to replace the existing ePrivacy Directive 2002/58. Law firm Stephenson Harwood noted in March that ”the ePrivacy Regulation will have direct effect in all EU member states and although it will not automatically apply in the UK, the UK may well look at updating its e-privacy regime, which was also based on the 2002 Directive”.

The proposal for the ePrivacy Regulation is currently being discussed by the European Commission, the European Parliament and the Council of the EU as the three institutions seek to update privacy rules for the digital age.

To offer telematics-based insurance policies - like telematics boxes - insurers collect and process data from terminal equipment, which will now be regulated by article eight of the new ePrivacy Regulation.

However - according to a report by Insurance Europe - neither the Commission’s proposal nor the European Parliament’s amendments provide a legal basis on which this activity can continue, which could make it more difficult and legally riskier for insurers to offer this type of product to consumers.

Niall Edwards, partner at global law firm Kennedys, said: “Telematics-based insurance services strongly benefit consumers by rewarding low risk drivers with lower premiums, while also improving road safety.

“To enable insurers to continue providing such innovations, [the] ePrivacy Regulation should include a legal basis for the collection of data from terminal equipment, whilst ensuring that users are still able to exercise their data protection rights.”

Preventative measures

To mitigate the potential impact on telematics innovation, Insurance Europe suggested that the co-legislators should preserve the Council’s prior version of article (8)(1)(c) of the ePrivacy Regulation.

In doing so, this will allow insurers to collect data as part of telematics-based insurance, as it would constitute as a service specifically requested by end users.

The federation also agreed that the collection of data from terminal equipment should remain protected under the new ePrivacy Regulation, while any subsequent processing of personal data should fall under GDPR, as called for by the European Data Protection Board.

Edwards continued: “Data protection legislation is vital in the fast evolving digital world. Getting the right balance between regulation and innovation is no easy feat – especially given the pace of technology.

“However, there is a growing concern that initiatives that include the European Commission’s work to regulate [artificial intelligence] systems may stifle innovation at the expense of the consumer.

“There are also potential considerations around corporate forum shopping – overly restrictive regulation could result in companies moving their data responsibilities, where they house their user data, and their innovation hubs to alternative, seemingly more favourable, jurisdictions.

“The UK has an opportunity to lead a more balanced approach via the developing National Data Strategy.”

Insurance Europe aims to represent all types and sizes of insurance and reinsurance undertakings through its 37 member bodies, which includes national insurance associations.