Regulating Robo-Advisors in Insurance Distribution: Lessons from the Insurance Distribution Directive and the AI Act

Pierpaolo Marano () and Shu Li
Additional contact information
Pierpaolo Marano: Department of Insurance and Risk Management, University of Malta, MSD 2080 Msida, Malta
Shu Li: Legal Tech Lab, University of Helsinki, Yliopistonkatu 4, 00100 Helsinki, Finland

Risks, 2023, vol. 11, issue 1, 1-13

Abstract: Insurance distributors are increasingly using robo-advisors for a variety of tasks, ranging from facilitating communication with customers to providing substantive advice. Like many other AI-empowered applications, robo-advisors have the potential to pose substantial risks that should be regulated and corrected by legal instruments. In this article, we attempt to discuss the regulation of robo-advisors from the perspective of the Insurance Distribution Directive and the draft AI Act. We ask two questions for each. (1) From a positive legal perspective, what obligations are imposed on insurance distributors by the legislation when they deploy robo-advisors in their business? (2) From a normative perspective, are the incumbent provisions within that legislation effective at ensuring the ethical and responsible use of robo-advisors? Our results show that neither the Insurance Distribution Directive nor the AI Act adequately address the emerging risks associated with robo-advisors. The rules implicated by them regarding the use of robo-advisors for insurance distribution are inconsistent, disproportionate, and implicit. Legislators shall further address these issues, and authorities such as EIOPA and national competent authorities must also participate by providing concrete guidelines.

Keywords: robo-advisor; artificial intelligence (AI); insurance distribution; IDD; AI Act; risk-based approach (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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