The development of e-commerce, particularly on the Internet, presents new challenges and concerns for insurance regulators and supervisors from developed, as well as developing countries.
1.Background
The establishment of Internet-based insurance businesses offers both individual insurance consumers and insurers and intermediaries potential efficiency and cost benefits. E-insurance improves information symmetry and market transparency conditions and may enhance competition that can lead to reduced prices.
For insurance regulators from developing countries, Internet-based supervisory tools may increase efficiency by streamlining and speeding up reporting from insuranceenterprises. The possibilities offered by Internet communication can also greatly improve the delivery of information to the public, insurers and local and international investors regarding market conditions, rights and obligations. Also, secure Internet communication could be a major tool for fostering international cooperation among regulators to improve the security of insurance markets.
From the perspective of a supervisory authority in a developing country, major concerns pertaining to e-insurance relate to cross-border activities and how to safeguard the interests of consumers if they contract policies in other jurisdictions. However, as most countries continue to require local licensing for insurers offering products in the domestic market and prohibit cross-border activity, cross-border trade in personal lines and mass insurance products has not expanded. Also, the cost of establishing e-insurance platforms, along with related marketing costs, has deterred financially unsound operators from establishing a significant web presence......
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