Digital Insurance Platforms: Legal and Ethical Challenges in Consumer Data Protection

Abstract

The rapid expansion of digital insurance platforms has transformed the insurance industry by streamlining policy issuance, premium collection, and claims management through data-driven automation. However, this technological shift introduces profound legal and ethical challenges in the domain of consumer data protection. Insurance companies increasingly rely on big data analytics, artificial intelligence, and blockchain-enabled ecosystems to personalize risk assessment and pricing, which in turn raises concerns about data privacy, algorithmic bias, regulatory compliance, and consumer rights. This study critically examines the evolving landscape of digital insurance with a focus on the tension between innovation and consumer protection. Using a mixed-method approach that integrates a legal-analytical framework with comparative case studies across leading jurisdictions (EU GDPR, India’s Digital Personal Data Protection Act 2023, and the U.S. sectoral regulations), the paper identifies gaps in enforcement, ethical dilemmas in consent management, and risks of discriminatory profiling. Findings reveal that while digital insurance enhances accessibility and efficiency, the opaque nature of algorithmic decision-making and cross-border data transfers exacerbate vulnerabilities for consumers. The study argues for a balanced framework that harmonizes technological innovation, legal safeguards, and ethical accountability, ensuring that digital insurance evolves as a trusted, transparent, and consumer-centric financial service.