Report - 13th International Microinsurance Conference, 7 - 9 November 2017, Lima, Peru

Plenary 4 - Mobile Insurance and digital technologies – Trends and supervisory approaches

By Shilpi Nanda

The plenary discussed trends in digital technologies and how they affect mobile insurance and the insurance industry itself. Supervisors, in particular, face new challenges in regulating an Industry changing rapidly in the face of data analytics and technology.

The pace of technological change is unprecedented
The world is undergoing a transformation being referred to as the Fourth Industrial Revolution (see Figure 45). It is characterised by a blurring of lines between physical, digital and biological spaces, and three overlapping technologies will redefine our lives in years to come:

  • genetics, to reprogramme our own biology;
  • nanotechnology, to manipulate molecular and atomic matter; and
  • artificial intelligence (AI), to create greater non-biological intelligence.

An example of this is smart cars, which now have features such as blind-spot detection, lane-departure warning, collision warning, trafficsignal notice, etc. In this case, technology has helped a particular risk category to move from post-event forensics to pre-event prevention. The expected proliferation of smart cars may lead to less and less of a focus on loss compensation (insurance) and more on services designed to avoid or mitigate loss. The next step from this will be autonomous vehicles reshaping the entire automotive industry.

Another emerging area is genetics, which is becoming more and more affordable for the public. With ever increasing supervisory restrictions on the information insurers can use in underwriting, there is a risk of asymmetry of information between the insurer and the insured, which could increase adverse selection. Life insurers need to monitor humanity’s race to beat death. More research, the use of artificial intelligence (AI) in medicine and 3D bio-printing may lead to unforeseen leaps in human longevity in years to come. Our technological evolution is happening faster than most people ever imagined and it is clearly happening faster than society is able to deal with. These are only a few examples of the challenges for the insurance industry alone and pose the question: Are supervisors prepared or are they perpetually playing catch-up while the industry and markets change?

Left to right: Peter van den Broeke, Senior Policy Advisor, IAIS, Switzerland; Denise Garcia, General Director of Research & Development, CNSF, Mexico; Michael Kofi Andoh, Head of Supervision, National Insurance Commission, Ghana.

Analysis to predict and understand the future
To better understand the future, the FinTech Task Force within the International Association of Insurance Supervisors (IAIS) performed an analysis of the potential impact of technological innovations through a scenario-based approach which considered the varying degrees to which new technology firms could disrupt the insurance business model and the insurer landscape. The analysis was based on three scenarios:

Scenario 1: The incumbent insurers successfully maintain their customer relationship and leverage technology firms for their own advantage. 

Scenario 2: The insurance value chain becomes fragmented as new technology enabled players enter the market. The traditional customer relationship weakens.

Scenario 3: Incumbents and traditional insurersare completely overtaken by pure technology  companies that provide insurance for the emerging needs of the consumer. 

Based on the scenario analysis, IAIS has several considerations for supervisors of the future, including: 

This may reduce over the long term, so work to encourage or accommodate competition and new entrants.

Consumer choice
Ensure that the ability to compare products between providers is not compromised due to an increase in customer segmentation.  

Business model viability
As customer segmentation increases and new players enter the market, will traditional business models survive? Ensure that the regulatory capital frameworks across the world are appropriate, accommodating changes in insurer risk profiles.

Data ownership
Proliferation of technology and big data potentially raises the risk of unauthorised access, use or transfer of personal data. Strengthen regulatory provisions for data access and transferability between providers.


Delivering client value in multipartner initiatives
One class of microinsurance driven by changes in technology and gaining market share is mobile insurance. In Ghana in 2016, there were 2.7 million mobile insurance policyholders, representing 60 % of all microinsurance policyholders. For these policyholders, the mobile network operator is the face of the insurance policy. The insurer carries the risk, but performs pricing and reserving with support from third-party service providers (TSPs). The TSPs assume all operational work, including marketing, customer registration, complaints and claims management.

Left to right: Stefanie Zinsmeyer, Advisor, Access to Insurance Initiative (A2ii), Germany; Sicelo Phiwayinkosi Nkambule, Founder and CEO, Riovic, South Africa.

In this business model, the regulator needs to keep an eye on client value to ensure that it is delivered in the multi-partner environment. There is also a risk related to the distribution channels. Much rides on the mobile network operator delivering the product to the customers. If the partnership between the insurer, TSP and MNO were to break down, it could translate into loss of cover for many overnight. From the regulator’s perspective, they now need to understand which parties need to be licensed. Traditionally, the insurer assumed all roles and responsibilities, but in this new paradigm the regulator has to reconsider the parties that require licensing and supervision.

It is also important to have proportionate responses to these developments as regulators have to actively promote innovation within the market. Ghana developed mobile insurancemarket conduct regulations to promote best practices in the market. The product approval measures were redesigned and cooperation with other regulatory entities enhanced.

On-demand mobile insurance
In South Africa, the changing face of mobile insurance is illustrated by a 2016 entrant, Riovic, which provides on-demand insurance. Riovic uses an online platform that allows users to purchase insurance when they perceive the greatest need. Users are able to get this short-term insurance via any mobile device, and daily accidental protection costs US$ 0.50, including life insurance of US$ 1,000 and medical insurance of US$ 50. Riovic’s strategy is aimed at millennial customers, a segment becoming increasingly difficult for traditional insurers to engage with because of the changing patterns of employment in the gig economy.


Carlos Alejandro Belloni, Strategic Consultant, Argentina.

Lessons learnt

  • Technology is driving a fourth industrial revolution. Insurance, and with it microinsurance, are two of the industries in the midst of it. The focus of insurance is shifting from post- vent management to predictive analytics leading to the prevention of the claim itself. 
  • The emerging challenges are particularly noteworthy for supervisors and regulators. Among market aspects they need to watch are competitiveness, consumer choice, business model viability and data ownership. 
  • With multi-partner arrangements on the rise in mobile insurance, supervisors need to ensure that client value is delivered as intended.
  • Technology is threatening the resilience of the current traditional business models. Insurers have to adopt creative approaches to meet the emerging needs of millennial customers in the technology driven economy.



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