FIDA and Consumer Trust: Addressing Privacy Concerns in the Insurance Industry

As the Financial Data Access (FiDA) regulation takes shape, it is poised to redefine the dynamics of open finance in Europe. For the insurance industry, this presents both an opportunity and a challenge: adapting to new data-sharing norms while ensuring consumer trust in how sensitive information is handled. However, with FiDA still in its formative stages, insurers must take a cautious and proactive approach to addressing privacy concerns.

Here’s how the insurance sector can navigate these uncertainties and reinforce customer confidence:

1. Commit to Transparency Through Permission Management

One of FiDA's features is the introduction of permission dashboards—tools for managing data-sharing permissions. Insurers can proactively prepare by:

• Educating customers about how these dashboards empower them to control their information effectively.

• Demonstrating a transparent intent to implement customer-centric privacy practices, regardless of the final FiDA requirements.

Transparency through such tools can address consumer concerns and reinforce trust in insurers’ data practices.

Permission dashboards implemented by data holders play a vital role in transparency. Read more about how FISPs enable secure data sharing here.

2. Prioritize Privacy Safeguards

The handling of sensitive customer data, such as financial and personal information, remains a key concern. To maintain trust:

• Focus on implementing data minimization practices, ensuring that only essential data is shared under FiDA’s scope.

• Strengthen internal data governance and security measures to safeguard customer data comprehensively.

Insurers can also highlight that FiDA excludes sensitive data categories such as life, sickness, and health insurance, reassuring customers about privacy protections.

3. Proactively Inform Customers About FiDA’s Scope

FiDA defines which types of insurance data are subject to sharing requirements and which are excluded. Insurers should:

• Communicate updates clearly to customers, emphasizing that data like life and health insurance remains excluded from FiDA’s scope.

• Develop accessible educational materials, like FAQs or interactive guides, to explain how data will be handled and protected.

Proactive communication will build trust and position insurers as transparent and customer-focused stewards of data.

Understanding which data types are subject to sharing under FIDA is crucial for building consumer trust. Financial Data Sharing Schemes (FDSS) play a central role in defining these boundaries and ensuring transparency. Learn more about how FDSS shape the future of open finance here.

4. Emphasize Compliance as a Trust-Building Strategy

FiDA’s alignment with GDPR principles underscores the importance of customer data control and protection. Insurers can:

• Reassure customers that their privacy is paramount and shared data will only be used responsibly and within agreed limits.

• Actively engage in discussions about FiDA’s evolution, advocating for fair and protective data-sharing frameworks.

5. Leverage FiDA’s Potential for Innovation

FiDA is set to unlock new possibilities in data-driven innovation, enabling insurers to deliver personalized products. To prepare:

• Build scalable, flexible technology infrastructure, such as APIs, to comply with FiDA and support future innovations.

• Explore how shared data can enhance product offerings, such as personalized insurance plans or risk assessment tools.

By emphasizing responsible innovation, insurers can position themselves as leaders in the new data economy.

Conclusion

The path to FiDA implementation is still being defined, but consumer trust will remain at the heart of the insurance industry’s success. By committing to privacy, transparency, and proactive engagement with the evolving regulatory landscape, insurers can reassure their customers and position themselves as trusted stewards of data in a FiDA-enabled world.

Critically, insurers must communicate FiDA’s distinctions, including which data categories are excluded, to build trust. Trust isn’t built through promises alone—it’s earned through consistent actions, clear communication, and a commitment to protecting customer interests. Insurers that prioritize these principles today will be better prepared for tomorrow’s open finance ecosystem.