Technology

In this chapter of our Annual Insurance Review 2023, we look at the main developments in 2022 and expected issues in 2023 for technology.

Key developments in 2022

During 2022, Governments and their Regulators have demonstrated a willingness to impose responsibility on 'Big Tech' to ensure the safe use of their platform, particularly in relation to vulnerable users of social media.

In the UK, on 3 March 2022, the Financial Conduct Authority (FCA) used its supervisory powers to crack down on an investment app's use of social media platforms to promote services. This move was to protect vulnerable investors. The action follows concerns that social media promotions are pushing young, unexperienced consumers into investments in high-risk products. The FCA will hold firms responsible for ensuring that sponsored influencer promotions comply with FCA rules. 

On 21 June 2022, the European Commission enforced consumer and advertising changes on social media platform, Tik Tok, following a complaint filed against them in 2021. Tik Tok had to commit to aligning its practice with EU consumer and advertising rules by the end of Q3 2022. Some of the changes include reporting ads that trick children into purchasing, banning promotions of "get rich quick schemes" and transparency over the platform's own currency, reward schemes and gifts.

This move follows a trend of regulators getting hands on with popular social media platforms to protect vulnerable users. With the EU's Digital Markets Act and Digital Services Act just around the corner (discussed below), it is time for platforms to start reviewing their online services to ensure that they are able to comply. The changes imposed on Tik Tok are a useful guide of practical changes that other platforms should review to understand what the regulators expect. 

What to look for in 2023

The Digital Services Act (DSA) came into force on 16 November 2022 and the Digital Markets Act (DMA) came into force on 1 November 2022. These Acts will become applicable to the tech sector's biggest players in 2023. Other intermediary services will be seeking advice on how to prepare for the DSA's implementation during 2023. 

The DSA applies to providers of intermediary services that offer services to a significant number of recipients in the EU. Some obligations include voluntary investigations to remove illegal content, providing user-friendly and electronic single point of contact, specific requirements for terms and conditions, transparency on advertising on online platforms, and informing consumers of a sale of an illegal product or service. While the DSA will become directly applicable to all digital services by 1 January 2024, "very large online platforms" or "very large online search engines" will be impacted by January 2023.  

The DMA enters into force in the spring of 2023 and applies to core platform services provided or offered by 'gatekeepers' to business and end-users established or located in the EU, irrespective of their place of establishment and national law otherwise applicable to their service. It aims to ban certain practices used by online platforms by imposing various obligations on them in relation to interoperability, data access, advertising and access to app stores.

Businesses that do not comply with the requirements of the DSA and DMA risk enforcement action against them including large fines for non-compliance. 

Written by Helen Monachan.

Download our full Annual Insurance Review 2023 for more insights.