Rapidly increasing technological and digital innovation (“FinTech”) will have far-reaching effects on the insurance sector. FinTech presents significant opportunities for financial inclusion and policyholder value yet also poses conduct and operational risks. The rapid expansion in alternative data sources and advanced data analytics has particular impact and has the potential to disrupt the insurance market. Therefore this is a strategic theme as part of the IAIS Strategic Plan 2020-2024. The main focus of the IAIS’ activities in this area are around sharing supervisory practices and providing a platform for exchange of experiences and insights.
In 2020, the IAIS published an Issues Paper on the Use of Big Data Analytics in Insurance, which explores benefits and risks for consumers resulting from the increasing use of big data analytics by insurers. The Paper acknowledges the significant benefits of advanced data analytics, including improved risk selection and pricing, more personalised and affordable insurance products, increased choices and more efficient servicing for customers. The Paper also cautions that the growing use of complex algorithms and expanding ability of insurers to access more data could create or amplify specific risks that may warrant heightened vigilance from supervisors.
Supervisors are called upon to consider collaborative and proportionate responses to these issues, maintaining a balance between supporting innovation and ensuring fair and responsible deployment of technology across the insurance value chain.
The IAIS Fintech Forum is a virtual forum of technical experts from the IAIS’ diverse Membership. It serves as a platform to share practical insights and experiences on FinTech-related developments influencing the insurance sector and insurance supervisors globally.
Together with the A2ii and FSI, the IAIS will start work later in 2022 on a public note on key trends and developments relating to the deployment of Supervisory Technology (SupTech) by insurance supervisors. This note will partly be based on the outcomes of a Member survey of supervisory responses to FinTech developments.