The International Association of Insurance Supervisors (IAIS) represents insurance supervisors and regulators from more than 200 jurisdictions in nearly than 140 countries.
Its Secretary General, Yoshihiro Kawai, outlined IAIS’s position with regards to FinTech in its recent newsletter.
For Kawai, FinTech presents both a significant opportunity and a threat.
“It is giving rise to new business models, applications, processes and products. These could have a material effect on financial markets and institutions and the provision of financial services”.
IAIS focus has been on financial inclusion. It acknowledges that FinTech, in particular mobile or online based sales, has already contributed to a significant increase in insurance sales in some emerging markets.
“New technology enables insurers, intermediaries and other financial service providers to customise products and marketing material”.
“However, more opportunities and fewer barriers do not automatically mean better market or customer outcomes and can also give rise to conduct of business risk”.
IAIS believes there are risks when products are sold online or using digital platforms without appropriate advice:
- Unauthorised insurers could sell insurance to a wide range of customers across borders
- The growing importance of data leads to risks to privacy protection and data security
- Sophisticated cyber-attacks may lead to customer data being stolen, manipulated or destroyed
IAIS also recognises that FinTech developments pose substantial supervisory and regulatory challenges.
Kawai acknowledges that both insurance regulation and insurance supervisors need to adapt, foresee potential risks and act in a timely and appropriate manner to pre-empt emerging risks of FinTech.
Kawai concludes that IAIS Members should be well informed and prepared. He rightly points to conduct of business risks. Boards and senior executives of insurance firms need to ensure their products and services are based on real customer needs. Ensuring good customer outcomes is key.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.