IAIS highlights Fintech impact

The International Association of Insurance Supervisors (IAIS) has published a report looking at the possible impact of Fintech on key parts of the insurance industry. It says innovations could fundamentally change the way in which the sector serves policyholders, so regulators must be alert to changes and risks. IAIS is concerned Fintech may reduce competitiveness over the long term by causing traditional insurers to leave the market. It also says it may result in more individualised products which could threaten price and product comparability, and might increase insurance sale interconnectedness through use of a limited number of platforms. While it may increase the focus on a good customer experience, this could come at a greater cost to the customer.

The report challenges supervisors to create an environment that fosters innovation safely. They should be prepared to change the prudential framework and consider whether existing reporting mechanisms allow them properly to monitor trends. Also, it says, supervisors should ensure they understand how innovations work.

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