JANUARY | AI and Finance | EU Data Hub | Financial Innovation Taxonomy | The Future of FinTech | Global Risks | Embedded Insurance |

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

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.

However please note that the views expressed in this newsletter are exclusively my own and should not be considered as representing the views/policies of the EIOPA with which I′m affiliated.

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#InsurTech #FinTech #insurance #innovation #AI #ArtificialIntelligence #FinancialStability #risks #GenAI

As artificial intelligence makes inroads into the financial system, it exacerbates existing channels of instability and creates new ones.

This column identifies several such channels, malicious and misinformed use, misalignment and the evasion of control, and finally risk monoculture and oligopolies.?

Read more here.

First synthetic datasets have been now uploaded to the EU Data Hub for FinTech, InsurTech and RegTech companies to use. The data relates to loans attributed to companies who reside in Lithuania.

Read more here.

The EFIF Taxonomy of Financial Innovation is now published in the ESAs websites. It is a classification system of financial innovation by sector, service and activities, and enabling technologies.

The taxonomy is aimed at supporting ESAs and the European Forum for Innovation Facilitators (EFIF) members with innovation monitoring tasks and policy-related work. It is not a binding, or exhaustive list.

Instead, it offers an indicative classification system which considers the evolving nature of financial innovations.

Read more here.

The global FinTech industry continues to display resilience and solid growth, however many long-term uncertainties remain.

Macroeconomic factors and the funding environment together stand out as the primary challenges for FinTech growth.

The majority of FinTechs reflect favourably about their regulatory environment.

Despite the significant drop in funding over the past years, FinTechs have differentiated views about the impact of the fundraising environment on their ability to grow.

FinTechs are expanding the provision of financial services and products to underserved segments, and these segments also make up a sizeable proportion of their consumer base and total transaction values.

These are key findings from the World Economic Forum report on the Future of Global FinTech.

Read more here.

"One could argue that actuaries have the duty to step up in Artificial Intelligence and protect what matters most – safeguarding welfare and protection of customers and societies."

This is a quote from Actuarial Association of Europe report on AI.

Among other things the paper highlights four key developments happening at the moment in insurance sector:

1. Existing risks and customers change due to AI (e.g., fraudulent claims through AI-generated pictures) potentially requiring adjustments of coverages, pricing, or risk sharing models.
2. New AI-related risks arise (e.g., claims caused by AI malfunction, or new operational risks) that require new products or approaches.
3. Competitive pressure increases as AI pushes efficiency across the full value chain, potentially forcing companies into applications of AI.
4. Regulators put more focus on AI which will require upskilling and organisational changes.

Read more here.

PWC highlights following trends:

1.???? Reinventing business and operations with a customer-first approach

2.???? Using technology to support strategy

3.???? Building relevance and trust with climate solutions

4.???? Trending deals impacts on insurers and other industry stakeholders.

Read more here.

The increasing adoption of AI in financial services continues to raise complex challenges in a shifting legal and regulatory landscape.

Here is another report looking into this topic by covering following areas:

1. AI in finance – key features and challenges
2. The global regulatory landscape
3. AI and financial services regulation
4. Reconciling AI with global data protection laws
5. Regulating AI through competition law – key issues to consider
6. Practical guidance on managing AI legal risk

From regulatory side the report maps out the latest developments in AI regulation in six key jurisdictions (China, Hong Kong, Singapore, the UK, the EU and the U.S.).

Note however it is from October last year so there might have been some further changes since then (e.g. regarding EU AI Act).

Read more here.

This recent report looks the blending of insurance into non-insurance products or services. Or so called “embedded Insurance”.

It argues there will be a shift from a B2B2C sales tactic to a B4B2C (business for business-to-consumer) enablement strategy.

The report also provides ten principles for the B4B2C Insurance Age.

Read more here.

This Global Risks Report explores some of the most severe risks we may face over the next decade, against a backdrop of rapid technological change, economic uncertainty, a warming planet and conflict.

According to the report there are four structural forces that will shape the materialization and management of global risks over the next decade.

These are longer-term shifts in the arrangement of and relationship between four systemic elements of the global landscape:

1. Trajectories relating to global warming and related consequences to Earth systems (Climate change)
2. Changes in the size, growth and structure of populations around the world (Demographic bifurcation)
3. Developmental pathways for frontier technologies (Technological acceleration)
4. Material evolution in the concentration and sources of geopolitical power (Geostrategic shifts).

The report aims to support decision-makers in balancing current crises and longer-term priorities.

Read more here.

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