Plenary Session 2: Proportionality in Times of …

1 Plenary Session 2: Proportionality in Times of DisruptionPeter van den Broeke International Association of Insurance Supervisors21 March 2018 ProportionalitySupervisory measures should be appropriate to attain the supervisory objectives of a jurisdiction and should not go beyond what is necessary to achieve those for achieving the outcomes of the IAIS Principles and Standards,Including on the fair treatment of customers (consumer protection)If not, unnecessary barriers may arise, preventing access to the market by insurance providers / microinsurers affecting access to insurance by the un(der)served population 2 Collecting and analyzing big data Developing new approaches to underwrite risk & predict loss Improving claims administration, reducing operational costs and increasing : innovations in the value chainProductDevelopmentPrice andUnderwritingDistribution and MarketingClaimsManagement Enhancing and improving customer interactions.

2 Usage based Behavioural based On demand P2P Connected devices (IoT) Drones Predictive Analytics Cloud computing Mobile & online distribution, aggregators, comparison sites. Drones DLT/Blockchain Artificial Intelligence Meeting changing customer needs with new report FinTech Developments in the Insurance Industry ANALYSISBASEDONTHREESCENARIOS44 Source: IAIS Report on FinTech Developments in the Insurance Industry , February conclusions in long term: Innovationascompetitiveadvantage,dominat ion&concentrationoftech-savvyfirms reducedcompetitiveness. Customized&embeddedinsuranceproducts reducedproductcomparability&consumerscho ice.

3 Limitednumberoftechnologicalplatforms increasedriskofinterconnectedness. Increasedfragmentationofinsurancevaluech ain reducedabilityforregulatoryoversight. Changesinriskprofiles(reductionsonaverag erisks:loweringriskpremiumvsincreasedext remerisks:largerproportionofresources) reducedresilienceofcurrentbusinessmodel. Conductofbusinessissuestoconsider:afford abilityofinsurance/financialexclusiondue toincreaseduseof(behavioural)data,aswell asownership, successfully maintain the customer relationshipInsurance value chain becomes fragmented; Incumbents no longer in controlBig technology firms squeezing out traditional insurers FinTech / InsurTech Challenges for supervisors Balancing the risks and benefits of innovations and creating an environment that fosters innovation through approaches such as regulatory sandboxes or innovation hubs.

4 Evaluating and, if needed, adjusting the prudential regulation framework. Considering the adequacy of current reporting requirements in monitoring trends and the potential build-up of risk connected to new technologies. Understanding how innovations work and are applied to ensure adequate assessments of new product and business