In order to provide online insurance services as well as simplify the filling out of information by a person in the insurance application, insurance companies obtain the necessary and up-to-date information on the client from the state databases through the unified insurance database (UIDB). Access to this information is carried out on the basis of the individual consent, for which information is requested through the state data access control (DAC) service followed by confirmation by the client of consent by sending an SMS from number 1414.
Insurers are actually not interested in the personal data of Kazakhstanis. IIN and other information are necessary for the government agencies to verify the existence of insurance contract and in case of insured event; otherwise payouts may be sent to the wrong people.
Despite the protection of personal data of individuals, the introduction of a mandatory state DAC service creates great difficulties for the implementation of online services.
“In particular, difficulties arise at the moment when a client issues an insurance policy online and wants to indicate a spouse, other family members or relatives as insured or beneficiaries. When requesting information from government databases on all persons included in insurance policy, insurance companies also require each person’s consent to access their data. And until the consent is received through the DAC service, issuing an insurance contract online is impossible,” says Yelena Taytugoleva, Deputy Chairman of the Board of LIC Nomad Life.
On one hand, this is enhancing security of access to the data of individuals, but on the other hand, such requirements create a problem when concluding an insurance contract online: the registration procedure of online policy does not take 2-3 minutes, as insurers promise, but significantly longer.
“And if, for example, a spouse or relative is out of the country or there is no mobile connection, they will not be able to confirm their consent to access their data stored in government databases, and the policy registration procedure will be significantly delayed or become impossible, since each person - the policyholder, the insured, the beneficiary - needs to confirm their consent by SMS reply to receiving a message from 1414 within two minutes. The complexity of such a service makes online insurance services unattractive and creates additional obstacles to their implementation. That is why the regulator, together with insurance companies, needs to work out ways to solve potential risks so as not to aggravate the situation and not slow down the development of online services,” Yelena Taytugoleva states.
The experts of Financial Institutions’ Association of Kazakhstan are confident that this innovation can significantly reduce some classes of insurance, for instance, group travel insurance and voluntary health insurance.
“Imagine a situation: a company employs several thousand people, they are told that on a certain day and hour they are to send an SMS to a certain number within two minutes, otherwise the company will not be able to get an insurance policy. What happens? Most people will not send messages, they will simply forget. However, voluntary health insurance is the employer’s desire to protect its employees. Travel insurance is also critical, but a legislative initiative puts these products at risk. This makes them inconvenient for customers. And people simply refuse to buy inconvenient products,” explains Yerlan Burabayev, managing director of FIAK.
The legislative innovation will also have a negative impact on online insurance. We got the opportunity to buy policies remotely not long ago.
“However, getting an insurance policy online is not possible in all cases and not yet for all insurance products today, mainly in mandatory classes of insurance. In voluntary types, due to the individuality of client requests, there are still some issues. Nevertheless, insurance companies see prospects in online sales of their products in order to make the purchase procedure as easy as possible, including for people located in remote areas, or for people with disabilities who find it physically difficult to visit the insurance company’s office,” emphasizes Yelena Taytugoleva.
It must be admitted that online car insurance (Mandatory Insurance of Civil Liability of Motor Vehicle Owners and CNC) is sold most often, as well as travel insurance and voluntary health insurance. People have already figured out the procedure for purchasing such policies and are actively using them. The same cannot be said about life insurance, which requires more complex calculations taking into account all client’s data and associated risks.
“It is quite difficult to develop a full packaged product that would be suitable for any person, as all input data about the client is individual and requires assessment by insurance company experts. Despite that, we are developing programs available for online registration. I believe the programs that are currently being developed will be continued. At least, for our part, we are considering opportunities to simplify the procedure for contract conclusion online, so there is a possibility to choose a plan and get insured within 2-3 minutes, including a purchase of retirement annuity or participation in the State Educational Savings System,” - says Yelena Taytugoleva.
There is a legal term “data operator”. In case with insurance, the data operator is the one who buys insurance for the benefit of another person. For instance, a husband or father makes his wife or children the beneficiary of his savings policy; the employer buys a policy for their employee; a travel company purchases insurance for clients. The data operator enters information about the third party.
“We have the right to believe the operator until proven otherwise. It is the operator who is responsible, not the insurer. We propose to introduce a “presumption of consent”, that is, if a person does not officially prohibit, then they agree that the insurer can use their data to conclude contracts. People should decide whether to prohibit or not the use of their data,” explains Yerlan Burabayev.
Only licensed organizations that are under the supervision of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market will be able to receive personal data.
“The regulator can always check how consent is obtained, how customer data is stored, how the insurer operates, and in the event of negative developments, take corrective measures or even suspend the license if there are repeated violations,” the speaker recalls.
In conclusion, the speaker added that safety measures must always be combined with people’s comfort; otherwise no buyer would spend money on an inconvenient product.
Photos are from open sources.