New Zealand should follow Singapore’s model for open insurance and avoid the mistakes of Australia’s Consumer Data Right, Deloitte says.

Insurers should engage with regulators, each other and wider stakeholders to design a commercially sustainable model, the consulting group suggests. Early engagement would preserve influence over standards, governance, scope, commercial models and customer outcomes.

“Not choosing is itself a choice, and one that risks leaving the future of insurance data sharing to others,” a paper from Deloitte and Insurtech New Zealand says. “Waiting could increase fragmentation and create opportunities for offshore aggregators or non-sector players to define how customers’ insurance data is accessed, shared and used.”

Deloitte says Australia’s experience shows how a “highly prescriptive, compliance-heavy approach” without early alignment on key use cases can increase costs and complexity, and hamper industry momentum.

The Consumer Data Right was introduced for banks in 2019 to let Australians use the data businesses hold about them.

But banks say it has cost $1.5 billion and is too complex. The government has paused a planned expansion into insurance, superannuation and telecommunications.

New Zealand should take heed and develop a workable, trusted and commercially sustainable model, Deloitte says.

“Being regulator-led with limited or late industry engagement could create a compliance-focused regime with limited commercial appeal, as seen with Australia’s complex and prescriptive Consumer Data Right design.

“Australia’s experience shows that complex regulation and a lack of strong use cases risks high costs and limited delivery of value.”

Deloitte commends Singapore’s “market-led approach” in which regulators partnered with industry to implement open insurance. In Brazil, insurers also worked closely with regulators through a central governing body to shape standards, consent and governance.

“By contrast, Australia legislated early but lacked alignment on use cases and took a prescriptive approach to design, resulting in higher complexity, compliance costs and slower uptake.”

See the paper here.