Insurance sector looks to balance technological innovation and consumer protection

Monday, March 19, 2018

InsurTech promises vast potential for transforming the world of insurance. These emerging technologies and innovative business models are already disrupting the industry, and bringing positive changes to how inclusive insurance operates, fostering better product design and risk assessment, improving efficiency and reducing costs. These efficiency gains can lead to lower premiums, better client servicing and faster payouts. Ultimately they translate into greater access and better value for low-income and emerging consumers. But InsurTech innovation could also have negative implications, for example by potentially increasing the risks of cyber-attacks, or by excluding lower income and higher risk consumers.
 
According to the World Insurance Report 2017, there are now around 1,000 InsurTech start-ups representing a combined investment of USD 2 billion worldwide.   “Ongoing innovations in InsurTech present great opportunities but may also increase the complexity of the insurance business and the supply chain. 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,” explains Jonathan Dixon, Secretary-General of the global insurance standard-setting body, IAIS
 
These are some of the issues that will be tackled by 60 high-ranking representatives from insurance supervisory and regulatory authorities, the insurance industry and the public sector from over 20 countries in Colombo, Sri Lanka tomorrow, 20 March, at the 12th Consultative Forum (CF12) “InsurTech: rising to the regulatory challenge”. 
 
Hosted by the GIZ Regulatory Framework Promotion of Pro-poor Insurance Markets in Asia (RFPI-Asia), CF12 is the first of a series of three events to be held through 2018. The series will focus on InsurTech and inclusive insurance, and is being organised by the International Association of Insurance Supervisors (IAIS), the Microinsurance Network (MiN) and the Access to Insurance Initiative (A2ii).
 
“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,” states Hannah Grant, Head of the Secretariat at A2ii
 
“We are excited to host this important gathering in Sri Lanka, where many households and small businesses stand to benefit from the development of a well-regulated and InsurTech-enabled insurance environment,” emphasises Indrani Sugathadasa, former Chairperson at the Insurance Board of Sri Lanka (IBSL). 
 
The event promises an exciting line-up of speakers including Tang Loaec, Founder of TongJuBao, a start-up providing peer-to-peer insurance in China; Arup Chatterjee, Asian Development Bank, who will provide an overview on how technological innovations are meeting the needs of emerging consumers; and Monnida Musicabud from AXA Asia, a global insurer that is successfully reaching millions of people in emerging markets.  The Forum will start by looking at what benefits InsurTech can bring to emerging customers and then look at regulatory challenges and how these are being addressed in different countries. Hot topics will include on-demand-based insurance, big data, blockchain technologies and robo-advice.

“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,” underlines Katharine Pulvermacher, Executive Director at the MiN. “We are glad that, together with our partners, we are able to leverage our convening power and long track-record working in inclusive insurance to foster this timely dialogue and knowledge exchange amongst regulators, supervisors and the industry to foster the sustainable development of the inclusive insurance sector across the globe.” 

CF12 is taking place alongside the GIZ RFPI-Asia Mutual Exchange Forum on Inclusive Insurance (MEFIN) Public Private Dialogue 5 (21-22 March 2018). The next Consultative Forum will take place on 9 and 10 May in Accra, Ghana, with the third event planned in Latin
America later this year.