Emerging technologies and innovative business models are already disrupting the re/insurance industry and bringing many advantages in terms of product design, risk assessment, cost, and efficiency, but InsurTech may also be increasing the risk of cyber-attacks and excluding lower income and higher risk consumers.
InsurTech is generally considered to provide greater access and better value for low-income and emerging consumers through lower premiums, better client servicing and faster payouts, but its associated risks should not be underestimated.
These risks are becoming more apparent as the industry grows, with the World Insurance Report 2017 listing over 1,000 InsurTech start-ups that currently represent a combined investment of US $2 billion worldwide.
“Ongoing innovations in InsurTech present great opportunities but may also increase the complexity of the insurance business and the supply chain,” said Jonathan Dixon, Secretary-General of the global insurance standard-setting body, IAIS.
He added: “The fast pace of change presents a challenge for regulatory frameworks. Supervisors must remain alert to these changes and consider how these new business models and new actors in the value chain impact regulatory objectives such as data protection, cybersecurity and policyholder protection, to name but a few.”
These issues will be under discussion by senior re/insurance representatives at the 12th Consultative Forum (CF12) in Sri Lanka this week, which is titled ‘InsurTech: rising to the regulatory challenge’.
The event is hosted by the GIZ Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (RFPI-Asia), and is organised by the International Association of Insurance Supervisors (IAIS), the Microinsurance Network (MiN) and the Access to Insurance Initiative (A2ii).
Hannah Grant, Head of the Secretariat at A2ii, said: “It is key that regulation, together with firm-level supervision, evolves to ensure the right balance between facilitating innovation, increasing the inclusiveness of the insurance sector, and maintaining the conditions for a fair, safe and stable insurance sector for the benefit and protection of policy holders.”
Katharine Pulvermacher, Executive Director at the MiN, also commented: “Inclusive Insurance provides crucial underpinning for sustainable development.
“It is designed to meet the needs of emerging consumers and plays a critical role in preventing households from falling back into poverty after a financial shock. It is therefore an important enabler in the economic and social development of a country.”
CF12 is the first of a series of three events to held through 2018 that will focus on Insurtech and inclusive insurance.