Peer-to-peer insurance platform to be tested in the regulatory sandbox
UAB Workpower has become the first company allowed by the Board of the Bank of Lithuania to enter the Bank of Lithuania’s regulatory sandbox and test a peer-to-peer insurance platform.
“We believe that peer-to-peer insurance services could become a cutting-edge way to protect consumers’ interests related to their owned or managed assets. Testing this innovation in a live environment will help us to assess consumer risks associated with such activities and make decisions on the existing regulation or the need for a legal framework,” said Marius Jurgilas, Member of the Board of the Bank of Lithuania.
The peer-to-peer (P2P) insurance platform is based on the principles of the sharing economy, where its members form groups of peers in order to protect themselves against losses, make their own decisions on loss compensation using pooled funds and get back the unused ones.
Set to run for 6 months, the peer-to-peer insurance platform will start its operation no later than by the end of October 2019. By decision of the Bank of Lithuania, its operation may be extended for up to 12 months. During the testing period, the platform will offer several types of cover for smartphones and tablets, while the list is expected to grow over time. The Bank of Lithuania will supervise and consult UAB Workpower – the owner of the peer-to-peer insurance platform – throughout the entire testing process.
According to the available information, UAB Workpower is not considered an insurance company, insurance intermediary or ancillary insurance intermediary, while the contracts concluded on the peer-to-peer insurance platform are not considered insurance contracts. Therefore, the activities of the company and the platform are not subject to requirements set out in the Republic of Lithuania Law on Insurance.
The Bank of Lithuania launched the regulatory sandbox in 2018. It aims at paving the way for faster and easier introduction of fintech innovations in the Lithuanian financial market where regulation is insufficient or unclear, allowing the Bank of Lithuania to identify emerging risks, regulatory shortcomings and take measures to eliminate them.
More information on participation in the Bank of Lithuania’s regulatory sandbox is available here.