Modern Insurance Regulators Tailored for the Digital Age

Insurance CIO Outlook | Tuesday, August 20, 2019

With advanced technology and a fresh approach toward insurance, ancient business models are now being reformed.  

FREMONT, CA: The business of insurance is sophisticated, and microinsurance that was once proven to be almost impossible is now seamlessly attainable. While promising examples have been documented of insurers accomplishing the impossible, sometimes even at scale, insurance cover for billions of eliminated adults appears to be a long way down the road. Digital technologies and business strategies are starting to transform the nature of insurance delivery. These technologies, popularly known as insurtech, promise to reach more people cost-effectively and in a way that delivers more consumer value. As more and more insurance businesses embrace the latest technologies, such as advanced and predictive analytics and robotic process automation, a burgeoning number of regulators are doing the same.  

Digital technologies are swiftly changing the insurance landscape globally. Mobile insurance is prevailing in many countries, but other digital technologies are on the acceleration too, helping to give a large number of households with coverage for the very first time. Insurtech creates possibilities for enhancing the financial formation and is giving rise to innovative market entrants, new business models, and efforts to transform consumer habits. It even enhances uptake and understanding.

Check This Out: Top Insurtech Startups in Europe

The implementation of digital platforms, technology-enabled collaborations, and peer-to-peer models in developing markets is a fast-growing trend. Insurtech has the power to reach more people, enable and engage emerging customers, improve client value, and enhance service delivery. Supportive regulatory situations tend to explore the possibilities provided by insurtech to develop insurance markets while protecting consumers.

To harness insurtech all the while guarding the financial system, the customers and their needs, regulatory clarity and dialogue with the industry is required. New regulatory frameworks need to be adequately flexible to encompass the fast-paced developments in digital technologies. It will create an enabling ecosystem for delivering economic profits while lowering operational expenses. It will also improve competition by advancing financial formation, encouraging innovation, and providing more accessible financial services.

Many insurance executives have a general mandate for market improvement or promotion of way to insurance, including innovative strategies. However, those working within rigorous, compliance-based regulatory frameworks will have more limited flexibility in supporting insurtech innovation than those working within a principle-based framework.

Regulators can imitate these leaders’ leading practices, especially regarding training. Companies are increasingly leveraging technological developments in data analytics to understand customers better, price more precisely for risk and outcomes. It designs more reliable products and enhances monitoring to alleviate the incidence and expense of fraud. Embracing the use of modern datasets has the potential to improve insurance inclusion substantively.

With more detailed modeling of risk, high-risk consumers are more likely to be priced out of the peril pool or even wholly excluded if no regulation exists to reduce against such practices. Another pillar of the client-centric prospect of the use of data and communication is enhanced the customer experience. While ample opportunities exist for insurance providers and insurtech businesses to improve the quality and efficacy of the services, technology solely is, by all means, a panacea.

Check out: Top RegTech Solution Companies

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