Insurance Europe

OPINION by Petra Hielkema, Chairperson of the European Insurance and Occupational Pensions Authority (EIOPA)

Insurance plays a crucial role in helping individuals, families and businesses manage life’s unexpected challenges – be it a car accident, a natural disaster or a health emergency. At its best, insurance offers people peace of mind and the financial stability to recover when setbacks occur. However, for many across Europe, access to adequate insurance coverage remains out of reach. This has consequences for society and the economy as a whole – for example, gig economy workers without the right income protection, small enterprises facing climate-related risks, and individuals in rural areas who struggle to access affordable policies.

To close protection gaps, we must change. We must embrace innovation responsibly, use data more effectively and reconsider how we share risk in a way that is fair and inclusive. EIOPA’s Digital Strategy emphasises balancing innovation with principles of financial inclusion and business model sustainability.

The continued importance of mutualisation

One of the most enduring principles in insurance is mutualisation – the idea that risks are more manageable when shared across a broad and diverse pool. This principle helps make coverage more affordable, especially for those who might otherwise be priced out due to higher risk profiles.

However, the rise of big data and advanced technology is creating pressure on this model. As insurers gain the ability to price risk with increasing precision, policies can become more personalised. While this can lead to greater efficiency and better-tailored products, it can also fragment the risk pool, offering lower premiums to low-risk individuals while potentially excluding those deemed higher risk.

It is important to ensure that personalisation does not erode collective protection. The challenge is to embrace new tools without compromising the risk sharing that underpins effective insurance systems.

Responsible data sharing

Used responsibly, data can greatly enhance the inclusivity and social and economic impact of insurance. It allows insurers to better understand customer needs and design products that address specific vulnerabilities, while also better grasping risks. For example:

• Climate and environmental data can improve access to agricultural insurance for smallholder farmers.
• Employment and income data can support the development of more flexible income protection for gig workers.
• Secure health data usage can lead to more responsive and affordable health coverage, while enabling insurers to explore more holistic preventative roles and services so essential in face of the coming longevity challenges.
  
  

This is why EIOPA’s work on the Framework for Financial Data Access (FIDA) and our Open Insurance initiatives, including proposals for customer-centric insurance dashboards, aims to standardise secure data sharing while preserving consumer trust. Individuals need to know their data is handled securely, ethically and transparently. It is crucial that the sector prioritises inclusion and access to insurance.

EIOPA is addressing these concerns through the launch of a Consultative Expert Group on Data Use in Insurance. This group brings together stakeholders from across sectors to explore defining principles on how data can be used to promote fairness, inclusion and innovation – while safeguarding mutualisation.

The role of innovation

There is no question that innovation is essential. The nature of risk is changing, and traditional models will not be sufficient to meet emerging challenges or to ensure the continued capacity of the insurance sector to contribute to individual and societal resilience. Climate change, digital vulnerabilities and demographic shifts require new ways of thinking.

Innovation can expand access to insurance in many ways:

• Developing flexible products tailored to those with irregular or informal incomes
• Reducing the costs of claims assessment and processing
• Building more robust predictive models of longer-term future liabilities
• Leveraging automation or parametric tools to enable faster, more predictable payouts
• Building digital platforms to improve consumer understanding and engagement with their own risks and the value of insurance, and reducing friction when seeking to cover those risks
  
  

Importantly, innovation is not only about technology – it is also about mindset. It means embracing collaboration, being open to new approaches, and placing consumer outcomes at the heart of insurance. It also means being sensitive to those left behind by digitalisation.

Looking ahead

As the foundation stones of a digital Europe and digital finance have fallen into place, we have a real opportunity to reshape the future of insurance by embracing innovation.

Key priorities include:

• Ensuring mutualisation remains a core principle even as personalisation grows
• Promoting ethical and transparent use of data
• Ensuring a focus on identifying the collective impacts of insurance – including via financial exclusion, and building an inclusive mind-set across the sector
• Recognising that consumer-centricity in the digital age requires a new perspective
  
  

Keeping people at the centre

At its core, insurance is about people – helping them navigate uncertainty, build resilience and live with confidence. When we focus innovation on expanding access and improving protection for all, we make insurance not just smarter, but fairer.

As the insurance landscape evolves, we must ensure that new approaches serve to widen, not narrow, the safety net. Innovation should be a bridge to inclusion, and data should empower – not exclude. Working together, we can build an insurance system that truly serves the needs of everyone across Europe.