The Global Federation of Insurance Associations (GFIA) has said that there is a pressing need for more dialogue between insurers, supervisors and the International Association of Insurance Supervisors (IAIS) to achieve a balanced approach that encourages and supports innovation, while assuring legal compliance.
The comments were part of a response by GFIA to an issues paper by the IAIS on the increasing use of digital technology in insurance and its potential impact on consumers. GFIA noted that while a few sentences in the IAIS paper mention some positive impact for consumers from innovation, overall the paper is negative toward innovation and therefore presents an unfair and even inaccurate picture.
GFIA said the IAIS paper, titled ‘Issues Paper on the Increasing Use of Digital Technology in Insurance and its Potential Impact on Consumer Outcomes’, should also discuss much more the effective efforts by supervisors and insurers to provide the right balance, including through regulatory sandboxes and other means to improve dialogue when innovation is proposed and implemented.
In addition, GFIA has outlined a set of guiding principles for innovation and insurance, and called on the IAIS to consider them. The principles are:
- Market participants want their products and services to meet the expectations of consumers in the digital age, especially consumer demands for new ways of interacting with service providers.
- Public policy should endeavour to create technology-agnostic regulatory oversight that maintains a high level of consumer protection, and ensures market participants have the flexibility to react, adapt and innovate to improve products and services, and/or meet shifting consumer expectations.
- Holistic and transparent regulatory changes need to occur across jurisdictions that will create environments that are proportionate and applied evenly to all market participants, conducive to innovation, and minimally intrusive on market forces so as not to unduly interfere with competition and collaboration.
- As technology is reorganising the economy, insurance providers want to fulfil their traditional risk management and financial security function that is indispensable for the incubation and proliferation of those innovations that will make way for the creation of new economic and social realities.
In its introduction to the paper, the IAIS said the purpose of the document, is to consider the impact of the increasing use of digital technology in insurance. It will consider consumer outcomes and discuss what digitalisation means for insurance supervision.
The IAIS added that digitalisation or digitisation is rapidly transforming and potentially disrupting insurance business. Examples such as mobile devices, IoT, telematics, big data, machine learning and artificial intelligence (AI), chat-bots, distributed ledger technology (DLT), comparators, robo advisors, peer-to-peer and platform business models have an impact throughout the insurance value chain: from the design, underwriting and pricing of products, their marketing and distribution, through to claims processing and the ongoing management of customers. M