We now hear from Erika Bérdi, who is an expert in insurance law. With many changes occurring in Hungary, Erika speaks about how she is excited for the challenges ahead, and the ways in which technology is impacting the insurance industry for the better.
The Hungarian insurance sector has been hit heavily by the financial crisis: especially the life insurance market, and the car related insurances suffered losses. On top of that, the scope of the previous Insurance Premium Tax (IPT) has been modified and extended, and insurance tax is payable to various accidental and asset insurances as well. The insurance industry used these challenges as a kind of possibility to organise a more effective operational structure, to elaborate more “crisis-proof” products, to find new distribution channels, new markets, and this revival has been accelerated by the new regulation scheme as well. As a result of these efforts (and certainly a lot other factors as well), the Hungarian insurance industry is growing in the last few years.
These changes gave lawyers a lot of work as well, but in my opinion it is more important that the changes also contributed to the modification of the current legal structures, and to the establishment of new legal instruments and new legal regulations. In Hungary we are in a codification process; in 2014 the new Civil Code entered into force, which is quite open to technological changes and gives certain flexibility to the insurance industry as well. This flexibility, combined with the risk-focused Solvency II regime, gives the possibility for insurers to be present on the market with various and variable products, focusing really to the needs of the consumers and to be able to serve the bigger corporate, or even more the big industrial clients as well.
I see a big future for the insurance in Hungary, but this needs the development of other sectors and cooperation with the market players of other industries as well. For instance in Hungary, the health system is based on the social security contribution and state support, but there is an increasing need for a strong private sector as well. The improvement of this private sector could also be accelerated by the insurance sector, which is offering different health insurance solutions, which has already had an improving effect to the smaller service providers.
Another big challenge for the insurance industry is to be available on online channels as well. This generation prefer the online availability rather than the traditional personal one, and beyond this, millennials whose parents also prefer to be able to communicate using online channels with the insurers. This creates a demand for IT development and data security questions, which needs to be answered together with insurance lawyers.
Even in this latter topic, the preparation for the application of the GDPR regulation brings a lot of work for insurers and other players of the insurance industry. In my opinion it is to be welcomed, as market players need to face the amount of data they handle, even if the protection of personal data had a priority in the sector even before adopting the GDPR regulation. The implementation of The Insurance Distribution Directive (IDD) directive will also be keeping us lawyers busy in the forthcoming months.
I really enjoy working as insurance lawyer during these challenging periods. In my opinion, law is important, however it is not the final goal, but only one tool, beside many others, which makes an insurance company compliant to the applicable market provisions, standards, and needs of clients. For me it is really interesting to find legal solutions in this changing environment. I like to use new technologies; I like that they make our life easier, and therefore it is really a pleasure for me to be able to participate in projects that are using such new technologies to bring insurance closer to people and to their needs.
Dr. Erika Bérdi
Erika graduated in 2004 in the Eötvös Loránd University, Faculty of Law in Budapest. From 2003 to 2013 she worked in in Cseri & Partners Law Office, when she opened her own firm. She and her office specialise in insurance law, labour law, real estate, commercial and banking law.
Erika is a member of the AIDA Hungarian Chapter (Association Internationale de Droit des Assurances), and regularly participate on its local and international events.