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Insurance is a business driven by data. Increasing processing capabilities applied to a wider array of data sources is likely to create tremendous opportunities for the benefit of insurers and customers alike, such as improved risk selection and pricing, more personalised and affordable insurance products, increased choices and more efficient servicing for customers.
On the other hand, the growing use of complex algorithms and rapidly expanding ability of insurers to access more data could create or amplify specific risks.
Such risks could include poor customer outcomes resulting from automated decision-making, potential affordability or exclusion challenges due to overly granular risk selection and pricing models, privacy and data protection concerns, and broader questions about the ethical use of artificial intelligence and machine learning.
Insurance supervisors can support innovation while maintaining their focus on protecting policyholders by ensuring that any technology deployment and use of data is done in a prudent, fair and responsible manner across the insurance value chain.
Ongoing dialogue and collaboration with multiple stakeholders, including market participants, consumer advocates, standard-setting bodies and other cross-sectoral agencies will be critical in helping insurance supervisors strike this balance.