With less than a year before the General Data Protection Regulation (GDPR) is implemented, the European insurance industry is still inundated with unsettling headlines and intimidating requirement warnings ahead of the ruling’s commencement. It’s true, there will be some initial updates to oversee- however the long-term results of the regulation are sure to be positive for the industry as a whole.
What is the GDPR?
The GDPR is the regulation replacement for the Data Protection Act, which was established before the start of the digital age. The GDPR will be enforced on 25 May 2018 and will alter the way companies handle customer data, establishing new rules around customer consent, profiling, data portability and the customer’s right to be forgotten (formerly the ‘Right to Erasure’).
One of the main reasons the GDPR is so desperately needed is that it will raise awareness of the ways in which data is often used without consumers’ full knowledge. In an era where communication is key, there is an overwhelming need for transparency, therefore the GDPR will be implemented to ensure data is secure and used in a clear manner. Staying compliant and regulating data will be key for building lasting relationships and trust with customers.
Consent will also be a big focus for insurers. The industry will have to be absolutely certain consent is given in order to use and profile customers’ data and they should always declare how they intend to use it. Additionally, new Data Portability rules mean that customer data must be passed on to a new insurer the second a customer decides they’d like to switch providers, meaning that long-term possession of data will soon be a thing of the past.
Profiling customers will also be made more difficult. The GDPR will call for insurers to stop making decisions about customers based purely on the results of automated processing, including profiling, unless they have established a legal right to do so. This avoids any inaccuracies and entitles every customer to a fair and legitimate evaluation.
Across the industry, trepidation seems to surround the lead-up to the implementation of the GDPR, however these customer-centric developments are set to transform customer experience for the better. It will allow insurers to present to customers the clear advantages of sharing data and will be pivotal in being able to offer more tailored policies, resulting in healthier and hopefully more long-lasting relationships. It is almost certain that insurers will be met with rising levels of customer satisfaction, trust and engagement.
If that isn’t inspiration enough, failure to comply with new data protection laws could result in hefty fines as high as four per cent of global group turnover or €20 million – whichever figure is greater.