INSURTECH IN 2033 | GENERATIVE AI & INSURANCE | IS UBER INSURTECH? | AI ACT | DEFI & INSURANCE | ESAP | OPERATIONAL RESILIENCE |

Capgemini and Google Cloud announced a major expansion of their long-standing strategic partnership in data analytics and artificial intelligence (AI), creating a global Generative AI Google Cloud Center of Excellence (CoE) to help enterprises realize the full potential of AI technologies.

Capgemini will build enterprise-ready use cases that solve industry-specific challenges and improve common business processes. The first wave of 100 use cases will initially focus on the financial services, insurance, retail, and automotive sectors.

Capgemini is already working with a leading insurance company located in more than 50 countries, to enhance the way very specific business data is queried by senior executives.

Read more here.

The European Commission is investing €46 million into piloting and enhancing the European digital identity (EUDI) wallet.

This investment is supporting use-cases that cover both public and private services with national and cross-border interactions and include areas such as access to government service, opening of a bank account, eSignatures, organisation of payments and social security.

While none of the use cases are directly related to insurance, I personally think it can definitely facilitate digital insurance provision.

First of course secure and seamless onboarding process with insurers, insurance intermediaries and pension providers including know your customer (KYC) process.

In addition to that similarly to other certificates it might also enable to save your insurance certificates in one place where they are conveniently accessible when needed.

One might also imagine use cases where you can save your bonus-malus statements in the wallet so to provide it to your insurers when moving abroad.

Or facilitation of secure exchange of health data that needs to be provided for health or life insurance onboarding.

To sum it up, the EUDI wallet aims to revolutionise how citizens and businesses can digitally identify themselves when accessing public and private services throughout Europe.

It will allow citizens to control their personal data stored within the wallet.

The wallet will also be equipped with mechanisms to minimise the data shared for accessing services.

Read more here.

Political agreement on the European Single Access Point (ESAP) was reached in May.

European Parliament and the Council negotiators agreed on common data spaces to merge information relevant for capital markets, financial services including insurance and pensions and sustainable finance.

ESAP will not create any new reporting requirements but should instead build upon existing disclosure requirements, procedures and infrastructure stemming from EU legislation.

In a way it will be a one-stop for financial and sustainability-related information about EU companies.

This should make EU capital markets more efficient, visible as well as support the green transition through sustainable finance.

And I personally think that as with any innovative solution we cannot imagine all use cases yet.

Read more here.

European Commission proposed yesterday new rules to protect and empower retail investors in the EU.

According to the press release the package includes ambitious and wide-ranging measures to:?

• Improve the way information is provided to retail investors about investment products and services, in ways that are more meaningful and standardised, by adapting disclosure rules to the digital age and investors' growing sustainability preferences
• Increase transparency and comparability of costs by requiring the use of a standard presentation and terminology on costs. This will ensure that investment products bring real value for money to retail investors
• Ensure that all retail clients receive at least annually a clear view of the investment performance of their portfolio
• Address potential conflicts of interest in the distribution of investment products by banning inducements for "execution-only” sales (i.e. where no advice is provided) and ensuring that financial advice is aligned with retail investors' best interests. Stricter safeguards and transparency will also be introduced where inducements are allowed
• Protect retail investors from misleading marketing by ensuring that financial intermediaries (i.e. advisors) are fully responsible for the use (and misuse) of their marketing communication, including where it is made via social media, or via celebrities or other third parties they remunerate or incentivise
• Preserve high standards of professional qualifications for financial advisors
• Empower consumers to make better financial decisions, by encouraging Member States to implement national measures that can support citizens' financial literacy, regardless of their age, and social and educational background
• Reduce administrative burdens and improve the accessibility of products and services for sophisticated retail investors, by making the eligibility criteria to become a professional investor more proportionate
• Enhance supervisory cooperation to make it easier for national competent authorities and European Supervisory Authorities to ensure that rules are properly and effectively applied in a coherent manner across the EU and to jointly fight fraud and malpractices.

I will deep dive in the coming weeks to understand better the implication for digitalisation and InsurTech and will share it in the next update.

Read more here.

The IAIS has now published its Issues Paper on Insurance Sector Operational Resilience, which identifies issues impacting operational resilience in the insurance sector and provides examples of how supervisors are approaching these developments, with consideration of lessons learnt during the Covid-19 pandemic.

Recognising that operational resilience is a broad and evolving area, the paper addresses the following three topics:

• Cyber resilience
• Third-party outsourcing
• Business Continuity Management

Read more here.

Decentralized technologies are finding increased adoption in the financial services across banking, capital markets, payments, and insurance sectors.

How should financial institutions prepare for a decentralized future?

Capgemini has identified following six key strategic focus areas.

1. Central Bank Digital Currency (CBDC)
2. Digital assets and tokens
3. Cryptocurrencies and payments
4. Decentralized finance (DeFi)
5. The metaverse and non-fungible tokens (NFTs)
6. Web 3.0

Read more here.

Data and models on climate-related risks are crucial to improve the accuracy of climate risk assessment.

However, tools enabling modelling are not easily available on the market.

The availability of tools can be seen as one major challenge SMEs will face when doing such exercise.

More tools and data are currently available or being developed.

But it is still challenging to get access to the right tools or data.

Cost and user-friendliness of such tools are one of the main hurdles that companies face.

More and easy-to-use open-source models have the potential to reduce the costs of running climate change analyses.

It can also increase innovation, the use of cat models, and raise awareness of the risks.

Ultimately, this could bring benefits to policyholders as well as to the insurance industry, and to the supervisory community.

Read more here.

ChatGPT brought home the power and possibilities of AI to insurers.

The report highlights following benefits for insurers:

• Enhancing Customer Acquisition
• Stamping Out Fraud As Early As Possible
• Improving Risk Assessments
• Expediting Claims For Better Customer Outcomes
• Enabling Real-Time Policies
• Optimising Customer Experiences To Improve Retention

The report also highlights areas holding back AI adoption:

• Data Selection And Consumer Acceptance
• Reticence To Engage
• Fears Around AI Replacing Humans
• Ethical Concerns
• Regulatory Barriers

Read more here and another view on same topic here.

Why is Uber's move to flight booking important from an?insurance?perspective?

Uber is planning to add flight booking functionality to its app in the United Kingdom

This will be done in partnership with the flight booking app Hopper.

Hopper is already providing products such as Prize Freeze, Flight Disruption Guarantee, and Cancel for Any Reason.

These products will also be available for Uber clients.

On a quick look, I noticed that Hopper is also offering more fully fledged travel insurance coverage in certain markets.

Therefore, this move by Uber is interesting to follow from an insurance perspective.

Read more here.

How are life insurance inclusion and innovation related?

Making underwriting simpler and using alternative data sources can make insurance more accessible.

This means asking fewer questions and using easier language can speed up the insurance buying process.

However, insurance companies need to be aware of potential proxy discrimination in data usage.

It is also suggested that insurers and reinsurers should talk to regulators to find a balance between innovation and protecting consumers.

This article presents a summary of the key findings from the recent SwissRe Institute Life & Health Insurance Inclusion Radar report.

Read more here.

The report highlights that bancassurance should develop plans to manage the ongoing digitalization in the banking sector.

Four points to consider are highlighted:

1. Taking advantage of current customer interactions to heighten customer experience and sales performance levels
2. Creating an omnichannel presence for an integrated customer experience
3. Using data analytics, AI, automation, and subscription simplification to build a consistent, real-time user experience personalized to meet customer needs
4. Understanding the three types of unique digital customers: engaged, dormant, and non-customers.

The reports summarises that bancassurance business must reinvent itself to stay relevant, capture digital opportunities, and expand to create success for the future.

Read full report here.

European Parliament endorsed new transparency and risk-management rules for AI systems.

High-risk AI use cases include systems intended to be used for making decisions or materially influencing decisions on the eligibility of natural persons for health and life insurance.

This draft negotiating mandate needs to be endorsed by the whole Parliament in June.

Negotiations with the Council on the final form of the law can begin after that.

Read more here.

How will digitalisation shape the insurance market by 2033 and what does it mean for supervisors, insurers and policymakers?

Digitalisation is undeniably going to have an impact on the insurance sector and its supervision.

The main technological trends range from growing data volumes and more powerful analytics to increasing connectivity and security and skills-related issues.

Insurers can apply those techniques in their pricing, policy conditions and acceptance policies.

Embedded insurance and automated advice are changing insurance distribution processes.

Data usage is facilitating the development of new types of insurance.

In addition to the impact on processes, distribution and products, the role of the insurer itself could change considerably.

Alternatively, the insurer's role in the insurance distribution chain could be reduced, with operational and contact management shifting to the manufacturer or an existing platform.

The anticipated developments driven by digitalisation create new risks.

The EU is trying to carefully manage technological developments using both horizontal and sector-specific legislation.

In the years ahead, supervisors will also need to design supervision in such a way that it reflects future developments as much as possible.

These were some of the highlights from the report.

Read more here.

This article provides an in-depth examination of the commercial and ethical aspects of generative AI for actuaries.

It focuses on how AI can enhance productivity.

Potential risks associated with relying too heavily on this technology are also explored.

Read more here.

This study aims to provide understanding of the state of FinTech and InsurTech and its future landscape.

What captured my attention was the statement that the overall financial services industry is enormous and very profitable.

Yet it struggles with innovation and customer experience.

Read more here.

Central Bank of Ireland recently published the results of our Insurance Digitalisation Survey which provides insights around the adoption and impact of digitalisation across the insurance value chain.

The report states that effective supervision requires a clear understanding of the current state and future direction of the Irish insurance sector.

This enables supervisors to identify, assess and respond to the risks which may arise.

Key findings of the report:

• Most firms stated that they have a digital strategy or plan to develop one
• The Survey suggests that digital maturity is moderate, but increasing, and is somewhat concentrated in more established digital technologies
• Digitalisation may create significant dependencies on the wider group and on third parties
• Digitalisation will give rise to new risks and challenges for firms but may also provide significant opportunities for both firms and consumers
• The Survey indicated some good governance and risk management practices. However, some firms may need to reflect on the appropriateness of the overall approach to the management of digitalisation risks

Read full report here.

The Monetary Authority of Singapore (MAS) and Google Cloud today signed a Memorandum of Understanding (MoU) to collaborate on generative artificial intelligence (AI) solutions that are grounded on responsible AI practices.?

The partnership will explore technology opportunities to advance the development and use of responsible generative AI applications within MAS, as well as cultivate technologists with deep AI skillsets.?

The MoU provides a framework for cooperation in technology and industry best practices in three areas:

• Identifying potential use cases, conducting technical pilots, and co-creating solutions in responsible generative AI for MAS’ internal and industry-facing digital services.
• Cooperating on responsible generative AI technology application development and test-bedding of cutting-edge AI products for business functions and operations, in line with MAS’ technology plans and other areas of mutual interests.
• Supporting the technical competency development on responsible generative AI as well as deep AI skillsets for MAS technologists.

Read more here.

Welcome to the latest edition of my monthly newsletter on InsurTech regulation and policy!

In today's fast-paced world, regulation can serve as a catalyst for innovation and competition in the insurance industry. By setting clear guidelines and standards, it promotes sustainability, consumer protection, and a level playing field.

My aim with this newsletter is to keep you up to date with the latest developments in InsurTech regulation and policy in the EU and beyond.

I believe that sharing these insights can contribute directly or indirectly to better consumer outcomes, ultimately increasing innovation and trust in the insurance industry.

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