A conversation with IAIS FinTech Champion Petra Hielkema

Digital innovation is a key strategic theme for the IAIS. Leadership and oversight of our work in this space is provided by the FinTech Champion, Petra Hielkema (she / her) , Chairperson of the European Insurance and Occupational Pensions Authority (EIOPA) , and member of the IAIS Executive Committee. After more than two years in the role, she reflects on the work of the IAIS FinTech Forum and looks to the future on what is coming next.

Petra joined Zafirah Adrus , Visiting Associate at the IAIS, in conversation.

Petra, we have been very fortunate to have you as our FinTech Champion and as Chair of the FinTech Forum for more than two years already. Can you share with us what makes the work of the FinTech Forum so interesting to you?

The variety of topics and developments happening in the FinTech realm make it so interesting to me, not just as a supervisor but also as a consumer myself.

We can see digitalisation transforming every part of the insurance value chain. Online platforms are becoming more prevalent, where consumers can buy insurance products with only a few clicks on their mobile devices. This serves as a vital element to improve not only financial inclusion but also access to a wider variety of protection products. The adoption of latest technologies – such as artificial intelligence (AI) and blockchain – opens possibilities for more advanced analytical capabilities, new business models and innovative products that can meet the diverse protection needs of consumers and even help close critical protection gaps. From a supervisory standpoint, FinTech also provides opportunities for us as supervisors, as it will impact how we organise our work, interact with supervised entities, analyse supervisory information and identify risks (often referred to as SupTech).

While these technological advancements present significant opportunities, they also pose risks to both insurers and consumers. Not just prudential risks like operational and cyber risks but also conduct risk and consumer protection concerns. Exploring how these issues intersect and the impact they have on how well we can achieve our supervisory mandates is what keeps us on our toes!

Therefore insurance supervisors must keep pace with these developments and be equipped with the right skills and tools to navigate and respond effectively. As the global standard-setting body for insurance supervision, the IAIS has been taking a forward-looking role in identifying key trends and emerging risks affecting the insurance sector. And we at the FinTech Forum are continuously finding ways to provide value to our members and support effective supervisory responses in this space.

Can you paint us a picture of how the FinTech Forum fits within the broader work programme of the IAIS?

As the IAIS, our mission is to promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders and to contribute to the maintenance of global financial stability. Two key activities in achieving this mission are promoting effective supervisory practices and supporting supervisors to be better equipped to proactively respond to accelerating trends and challenges in the insurance sector.

The IAIS Fintech Forum – which consists of technical experts from supervisory authorities across the globe – provides a platform for knowledge exchange on FinTech developments influencing the insurance sector and insurance supervision globally. The continuous and candid exchange of supervisory insights, practices and experiences amongst IAIS members is at the heart of what we do at the FinTech Forum.

Our discussions span a broad spectrum of topics – AI to crypto, RegTech and SupTech, decentralised finance (DeFi), as well as open insurance. Beyond regular FinTech Forum meetings, we also co-organise supervisor-only events to facilitate these discussions, such as the recent collaboration with the Basel Committee on Banking Supervision and Financial Stability Institute (FSI) on SupTech in June 2023 and another on AI with EIOPA and the FSI in October 2023.

Can you share with us what you are most proud of in terms of the key milestones or achievements of the FinTech Forum so far?

There are two specific areas I’d like to highlight where the FinTech Forum has done excellent work, thanks to the close collaboration we have amongst IAIS members.

First are the many publications we have published over the past years, facilitating a deeper understanding amongst supervisors on different digital innovation topics. Since 2018, the IAIS has published seven public-facing reports on the IAIS website and two internal reports, which are accessible to IAIS members only.

Just to name a few, in 2022 the IAIS Report on FinTech developments in the insurance sector presents the high-level findings of a deep-dive assessment on the role of open data, distributed ledger technology and AI in insurance, and the A2ii-FSI-IAIS joint note on SupTech in insurance supervision cites 38 examples of SupTech tools used by 22 jurisdictions for prudential and conduct supervision, challenges faced and lessons learnt from using these tools in supervisory processes.

The findings from these reports then led the FinTech Forum to develop two internal reports on DeFi and AI to facilitate the continuous exchange on topics which are top-of-mind amongst supervisors. We also issued a short public summary of the internal AI report on the IAIS website to provide an interim update on our work relating to AI.

The second is being more inclusive in our activities. As you know, the IAIS is committed to deepening and strengthening its work on diversity, equity and inclusion. As part of this initiative, we welcomed nine new members to the FinTech Forum in 2023, bringing the total to 30 members, and I can see our membership growing in the future. We wanted to promote more diverse participation to bring different perspectives to the table. We now have supervisory authorities from all regions across the globe, with 33% coming from emerging market and developing economies (EMDEs), and we have experts both from authorities with a prudential and a market conduct mandate (or both). In addition to supervisors, we also actively engage with various external stakeholders in the insurance industry, either via bilateral meetings or by organising workshops. Receiving timely feedback and market intelligence from industry players is vital for supervisors to keep abreast of latest FinTech developments. We appreciate the willingness of our stakeholders to share their thoughts with us, and I am confident that we will continue to have more vibrant and candid dialogues because of it.

Looking ahead, what can we expect for 2024?

For 2024, you will not be surprised when I say it is all about AI.

AI is already at the forefront of the work of many supervisors and standard-setting bodies around the globe due to the emergence of legislation (e.g. AI Act in the EU), guiding principles on the use of AI (e.g. OECD AI Principles) or proposed regulation/supervisory guidance to ensure the robustness, fairness, transparency and explainability of AI models used in the insurance sector. Against this backdrop, the IAIS will develop an application paper on AI beginning this year. The paper, which is expected to be issued for public consultation at the end of 2024, will focus on how the relevant Insurance Core Principles can be interpreted and applied in the context of specific AI use cases adopted in the insurance sector, by providing examples of good practice.

Work to develop the IAIS’ next Strategic Plan for 2025-2029 is currently underway. Can you give us a sneak peek into how digital innovation will be positioned in the work of the IAIS moving forward?

I expect digital innovation and FinTech-related issues to remain key features in the next Strategic Plan. Engagement with members and stakeholders to date indicates that there is continued demand for supervisors to look at digital innovation trends and for the IAIS to help with formulating the necessary responses. The IAIS is, therefore, well positioned to play an important role in supporting the global insurance supervisory community to cooperate and collaborate in responding to these issues effectively and in sharing emerging best practices. Further details are being firmed up, but we are excited for the IAIS’ 2025-2029 Strategic Plan to be finalised later this year.