JULY | (Gen)AI in insurance–business, regulation and supervision across the globe | The future of financial advice | Open Insurance | GenZ & insurance

Welcome to the July 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 #OpenFinance #OpenInsurance #GenAI #OpenData #CyberInsurance #FIDA #FinancialAdvice

(Gen)AI in insurance – business, regulation and supervision across the globe

Industry views

This Deloitte report looks GenAI and insurance. From the UK perspective but interesting beyond that. Read more here .

Another Deloitte report looks what insurance CEOs should understand about the impacts of GenAI. Read more here .

Allianz has also published survey results on GenAI impact to insurance. Read more here .

Regulatory and supervisory views in the EU and US

Curious what is overall EU regulatory framework applicable to AI systems in the insurance sector?

EU AI Act is finally published, and it has implications for insurance sector.

This EIOPA two-pager highlights new features introduced by the AI Act for the insurance sector. Furthermore, it explains the interaction between the AI Act and insurance sector legislation.

While the AI Act introduces some additional requirements for providers or deployers of high-risk AI systems, insurance sector legislation continues to apply across all use cases, regardless of their qualification under the AI Act. Read more here .

In the meantime, the U.S. House of Representatives Committee on Financial Services conducted six roundtables focused on AI use cases across the Financial Services industry.

These roundtables focused on the range of benefits and risks the technology poses, and the hurdles to adopting the technology.

One roundtable was dedicated to housing and insurance.

During the housing and insurance session, participants highlighted how AI has facilitated a major shift in housing and insurance products and services.

This shift has allowed for new benefits and conveniences to consumers but has also presented fair housing, consumer protection, and other challenges.

For example, businesses are deploying AI to underwrite mortgages and insurance policies, screen tenants, simplify and enhance the overall customer experience, and perform data analytics that guide their responses to consumers and risks. Read more here .

Finally, New York Department of Financial Services adopted guidance on use of Artificial Intelligence systems and external consumer data and information sources in insurance underwriting and pricing.

It aims to protect consumers from unfair or unlawful discrimination by insurers using artificial intelligence. Read more here .

Consumer Data Right in Australia

Australian Banking Association (ABA) have released the findings of a strategic review undertaken by Accenture into the roll-out of Australia’s Consumer Data Right (CDR) regime.

Read more here .?

Lloyds Lab InsurTech Start-up Guide

Lloyds Lab has published "Getting off the Ground" InsurTech Start-up Guide.

It covers different topics from legal, licensing and business model taxonomy to how to prioritise the customer experience, how to raise funds and build a strong brand and team.

From the UK perspective but most of the topics are rather universal I would say.

Read more here .

Embracing Open Insurance in Europe’s Financial Services Sector

Longer reading on Open Insurance in Europe’s financial services sector by Plug and Play Tech.

It includes an overview of policy process (FIDA) and business models.

Read more here .

Licensing and Regulatory Framework for Digital Insurers and Takaful Operators in Malaysia

Something that might be interesting both for financial/insurance sector policy makers and innovators.

Bank Negara Malaysia (the Central Bank of Malaysia/BNM) have issued the Policy Document on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators (DITOs).

The policy document sets out requirements to facilitate the entry of DITOs that can deliver strong and meaningful value propositions of inclusion, competition and efficiency. This policy document aims to facilitate the entry of licensed digital insurers and takaful operators with strong value propositions to serve the unserved and underserved market, provide competitive offerings and enhance consumer experience via the adoption of advanced digital technology and innovative business models.

Applicants shall be committed to drive all of the following outcomes in a sustainable manner:

• Inclusion – Enhanced financial resilience of consumers whose protection needs are currently either not served or not adequately served (“unserved or underserved”);
• Competition – Innovative insurance/takaful products to cater to the diverse protection needs of consumers; and
• Efficiency – Convenient and seamless consumer experience with greater cost savings.

BNM no longer limits the number of licences to five only as communicated in the earlier press statement in November 2022.

Read more here .

The Future of Financial Advice

The landscape of financial advice is undergoing a profound transformation due to rapid technological advancements, demographic shifts and evolving consumer expectations.

Traditional models of financial advice are being re-evaluated in light of these changes, pushing the industry towards innovative practices that could significantly enhance the financial well-being of individuals globally.

This white paper delves into the transformative trends in financial advice, drawing on insights from industry leaders, academics and policy-makers.

The paper calls for technological innovation, enhanced financial literacy and a holistic approach that promotes inclusivity and transparency.

The ultimate goal is to empower individuals to make informed financial decisions that facilitate long-term financial stability and well-being.

Read more here .

How Gen Z feels about insurance?

• Over half of respondents (54%) shared they feel "overwhelmed or anxious" at "the thought of dealing with insurance."
• About 1 in 3 young adults (34%) said they were "going to try to wait as long as possible" to get their own life insurance.
• Over 1 in 4 (28%) saying the same for health insurance.
• There's also a gap in insurance knowledge among GenZ adults.

These are some of the findings from a new survey overseas colleagues from the National Association of Insurance Commissioners (NAIC) conducted.

I presume the situation in Europe is quite similar. So it seems we all in the insurance space have some work to do.

Read more here .

What does the EU AI Act mean in practice for Open Data ecosystems?

Artificial intelligence significantly impacts businesses, governments, financial and insurance sector and the global economy.

This report investigates what the main legal and policy challenges are when it comes to the use of AI and provides an overview of these challenges.

Great reading if you want to learn new insights on the EU AI Act and the EU’s agenda on this topic.

Read more here .

Three B2B2C business models for insurance industry

1. Affinity model

2. Embedded insurance

3. Commercial partnership

This article aims to be a guide for industry practitioners who want to consider the opportunity, understand its relevance to their businesses and, possibly, design a strategy to develop or re-organize their approach to B2B2C.

However, I personally think it is also good reading for insurance supervisors and policy makers.

Read more here .

Digital Modernization in the Insurance Industry

Legacy technology is holding insurers back.

According to this report the single greatest barrier to the adoption of digital tools and new ways of working among insurance companies is legacy technology infrastructure.

To better understand the problems insurers are up against you can check full report below which was informed by a survey for 200 global insurance executives were conducted.

Read more here .

Five dimensions essential for designing and implementing Data Portability frameworks

Data portability enhances access to and sharing of data across digital services and platforms. It can empower users to play a more active role in the re-use of their data and can help stimulate competition and innovation by fostering interoperability while reducing switching costs and lock-in effects.

However, data portability can also increase digital security and privacy risks by enabling data transfers to multiple destinations.

This note presents the following five data portability dimensions:

1. Operational modality
2. Legal obligations
3. Sectoral scope
4. Beneficiaries
5. Type of data

P.S. Very good international overview including link to recent EU data initiatives and Estonian X-road.

Read more here .

Cyber insurance

AON has published the Global Crowdstrike/Windows Event Briefing, outlining the initial implications for cyber re/insurers.

This is a bit different from the type of publication I usually share.

However, I think it is interesting for those active in insurance and, more generally, in the ICT space.

It is also topical in light of the Digital Operational Resilience Act (DORA) preparations in the financial services sector.

Read more here .