Facing up to the General Data Protection Regulation

Europe’s updated data protection rules, the General Data Protection Regulation or GDPR, become effective May 25 and could presage tougher regulation in other parts of the world.
By: | April 27, 2018 • 4 min read

On May 25 Europe adopts the General Data Protection Regulation (GDPR), a long-planned overhaul of how businesses collect and process data. The current regulations go back more than 20 years to a pre-Facebook era when the internet’s potential was still being explored, so the new set of data protection rules was overdue.

As Risk & Insurance® reported last year, the impact of the GDPR extends beyond the European Union. Once it takes effect it will affect not only companies across the EU’s member states, but any business or public sector organization that collects and processes data about its residents.

Failure to comply with it will result in heavy fines. In many European countries, according to Aon and DLA Piper, those fines appear to be uninsurable.

As HR departments are the guardians of large amounts of personal data, many have sought guidance on what steps they should be taking in preparation. This has produced an Amazon bestseller, The Little Book of GDPR, for Darren Wray, CEO of Fifth Step, who this week gave a market briefing for the International Underwriting Association (IUA) in London on what GDPR compliance entails.

Darren Wray, CEO, Fifth Step

Other parts of the world are also revamping their data protection rules; Australia, for example, introduced the Notifiable Data Breaches (NDB) scheme in February.

However, Wray suggested that GDPR could establish itself as the new template, meaning that the HR departments within U.S. companies would do well to become familiar with its requirements, if they haven’t already done so.

Facebook is evidently aware of the repercussions. The social networking giant is about to move 1.5 billion members in Africa, Asia, Australia and Latin America currently routed through its Ireland base to the U.S., to take advantage of the latter’s more lenient privacy laws.

While the advantage might prove temporary should consumer pressure mount for a U.S. equivalent of GDPR, Facebook’s caution is understandable.

The financial penalties imposed for breaching GDPR are the greater of 4 percent of the organization’s revenue or around $24.2 million (depending upon the exchange rate at the time of the fine).

The IUA briefing also referenced the massive data security breach suffered last fall by Equifax, which took the credit reference agency months to reveal and could eventually cost it $600 million or more.

However, Wray noted that “under GDPR, the company would no longer exist.” A mandatory post- breach period of 72 hours maximum will now apply to any company that becomes aware of any personal data breach.

More unexpected was the revelation that Equifax even derived some profit from last year’s episode by providing customers affected by the breach with a free three-month fraud protection service but then charging for it once that period had elapsed.

However, it may not yet be off the hook in the UK, where regulator the Financial Conduct Authority (FCA) is deciding whether the company violated the terms of its operating licence and if compensation to consumers is appropriate.

Dawn of the DPO

The lowdown for any business with European customers is that the GDPR isn’t optional. Companies will need to comply, regardless of their location.

It means obtaining the explicit consent, or opting-in, from any individual whose personal details they collect and process and ensuring that data is handled at all stages in a legally compliant way.

It also requires distinguishing between data protection — the risk of infringing an individual’s personal rights; and data security — the risk of it being lost, deleted or abused, while categorizing personal data as either sensitive or non-sensitive as the former requires higher protection and carries additional GDPR requirements.

The lowdown for any business with European customers is that the GDPR isn’t optional. Companies will need to comply, regardless of their location.

The new regulation also extends eight basic rights to each individual whose data is collected and processed by a company, such as the right to access a copy of the details being held on them.

They can also object to the company using their data; in some cases request erasure or ‘the right to be forgotten’ so that their data is deleted; and demand rectification where any of the personal data held is inaccurate or needs to be updated.

One that Wray foresees involving particular change is the right to data portability, enabling the individual to easily log on to the data being held about them, access a copy in standard format and use it, for example, when applying to a new insurer.

As a part of the organization that deals with large volumes of data — much of it sensitive — HR departments will be particularly susceptible to the tougher standards imposed by the GDPR. Their data lifecycles have an extended lifespan, ranging from when an individual is hired to their eventual transition to a retiree.

The new rules also promise bright career prospects for the data protection officer (DPO), whose role will be an essential one for any sizeable business. &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at

More from Risk & Insurance

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Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”


“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.


“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?


“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at