New landscape means new laws
BUILDING NEW LONG TERM PARTNERSHIPS REQUIRES CAREFUL LEGAL PLANNING
of their insurance obligations. Careful contingency planning can ensure continuity of service and satisfy regulatory requirements in the event of a relationship with a partner or local service providers breaking down. For example, contracts could include “soft landing” termination provisions, with detailed notice provisions and procedures for addressing complaints following terminationof thearrangement. 23 Although a distribution partner will likely have most contact with customers and exercise a large degree of control and oversight of the customer relationship, insurers will still need to understand their regulatory obligations regarding disclosures and communications with policyholders and ensure those standards are met. The parties may also need to agree on how premium is to be calculated. For example, there can be challenges in determining the value of premiumpaid via airtime onmobile networks. Parties will need to determine how such payments aremonetised and allocated. Branding will also need to be considered where an insurer relies heavily on its local mobile network operator (MNO) partner, or where there are branding requirements for insurers under local regulation. If an insurer has an agreement in place with an MNO for example, it may need to ensure that the MNO in turn has agreements in place with technical service providers or others in the value chain and can supervise them effectively and appropriately in line with applicable regulatory standards.
If an inclusive insurance business model depends on partnerships between insurers and partners (such as MNOs, credit unions, retailers, or microfinance institutions) for distribution or claims administration, those involved will need to consider what terms will govern that arrangement and how to deal with any disputes. In China, microinsurance and parametric insurance products are frequently designed and sold locally with the support of local governments. However, since there is no specific law or regulation regarding microinsurance, its development is still in the pilot stage and subject to case-by-case approval by the regulator. Many of the partnerships that are being formed are novel groupings with parties that may not have much trading history or experience of working together. Some technical service providers may themselves be relatively new insurtech start-ups. Mutual expectations may vary. Insurers will likely have regulatory responsibility regarding the fulfilment - Xiaolin Lin, Clyde & Co, Shanghai
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