Consumer Protection in Digital Insurance: Legal Responses to Emerging Risks in Developing Economies

Abstract

Background: The rise of digital insurance platforms in developing economies has revolutionized access to insurance products, offering greater convenience and affordability. However, these advancements bring new risks, including data privacy concerns, algorithmic biases, and fraud. Legal frameworks must adapt to protect consumers in this rapidly evolving digital landscape.

Objective: This study examines the legal responses to emerging risks in digital insurance across developing economies. It focuses on identifying gaps in consumer protection laws and proposing strategies to strengthen regulatory frameworks in the context of digital transformation.

Methodology: A case study approach was employed, focusing on legal frameworks and consumer protection measures in Venezuela, Ecuador, and Paraguay. Data was collected through interviews with regulators, insurance providers, and legal experts, as well as an analysis of legislative documents, policy reports, and case law. Comparative insights from other developing regions were included to highlight best practices.

Findings: The findings reveal significant challenges in protecting consumers in the digital insurance sector. Venezuela faces regulatory enforcement issues, Ecuador struggles with legal ambiguities in data protection, and Paraguay has limited consumer awareness of digital insurance products. The study recommends updating legal frameworks to address digital risks, establishing independent oversight bodies, and fostering public-private partnerships to promote accountability. Additionally, enhancing consumer literacy on digital platforms is essential to build trust and ensure equitable access to insurance services.