Regulation, technology and insurance trends
Regulation, technology and insurance trends have sparked some interesting articles coupled with some active debates as we start 2020. Change is an ever constant theme. In the first place, regulation is constantly evolving to keep up with new technology and evolving consumer behaviour. In addition, the insurance industry continues to grapple with the possibilities of the digital age alongside ever changing global risks. This constantly moving backdrop results in very interesting times for the insurance market.
Financial Conduct Authority (FCA) Regulation Round Up
- FCA Fines: The FCA issued fines totalling £392,303,087 in 2019. Details are itemised in the 2019 fines table.
- The Financial Services AI Public Private Forum (AIPPF): The FCA and the Bank of England (BoE) are establishing a forum to help them understand the impact of Artificial Intelligence (AI) together with Machine Learning (ML). The initial objectives and Terms of Reference are outlined here.
- FCA make changes to data strategy: The FCA recognises that technology and advanced analytics techniques have evolved significantly over the last 6 years. Consequently, they have now issued a new Data Strategy.
Other Regulation information
- The Financial Ombudsman Service (FOS) consultation: FOS have issued their Consultation Paper on the 2020/2021 strategy. Proposals include an increase in individual case fees from £550 to £650 in addition to a reduction in ‘free’ cases for each firm to 10 per year.
- Right of Access: The Information Commissioner’s Office (ICO) is requesting feedback on their draft Right of Access Guidance. The consultation period is open until 12th February 2020.
- ‘Whiplash’ reforms: From 6th April, personal injury claims related to road traffic accidents that are under £5,000 can be managed through a new Official Injury Claims Service without the need for legal representation. The new process has moved a step closer as Claimant Representatives and Compensator Organisations can now register for this service ahead of launch.
- Tougher security for smart home devices: The government plans to introduce a new law governing household appliances that are connected to the Internet of Things. The legislation will cover these three specific areas:
- Password security
- Manufacturers point of contact
- Length of security updates for the item
Technologies in focus
Voice activated tech
- Voice skill for car insurance: According to the article LV=General Insurance unveils pioneering tool customers with Amazon Alexa or Google Home Assistant can now get answers to over 500 policy questions. The company believe this initiative will not only make things easier for their customers, but will also lessen the burden on their call-centre staff.
Artificial Intelligence (AI)
- AI potential for the insurance market: An AI Status Report from SMA identified a big interest in AI, indeed, only 8% of the companies questioned indicated they had no interest in this technology. However, AI is currently mainly explored through small projects in the first place, despite this interest. In the light of this research, the report concludes “…the potential of AI technologies is overhyped for the near term but underestimated for the long term.”
- By Miles: The UK company is the first insurtech to be granted an Open Banking licence by the FCA. Co-founder and Chief Executive James Blackham believes that the insurance industry has much to learn from Open Banking. “If they embrace this new world, insurance companies will be able to design more flexible products that are better tailored to the people that use them, and more people will be able to access them…”
- Insurtech Market: These are the Top 20 Insurtech Companies in the UK, according to Sonovate. They range in funding from £0.9 million to a £180 million. Following the recent announcement that Honcho secured over £700,000 from their latest funding round, we may see a new entrant on the next list.
- Getsafe: The German insurtech Getsafe brings its contents insurance app to the UK via a partnership with Hiscox.
Other Market News
Trends in 2020
- Emerging Risks: E-cigarettes, air-pollution and genetic testing are amongst the risks highlighted in Emerging risks in 2020
- Challenges for the Global economy: What’s Hot for 2020? compiled by Aon identifies four hot trends for business leaders this year:
- Focus on data-driven insights, with 71% of companies plan to increase their investment in AI.
- Need to identify what drives business value, with leaders giving increased priority to their Intellectual Property.
- Cyber-risk mitigation, with Cyber attacks seen as the 6th most significant business risk globally.
- The need to attract and retain the right talent – technology is not enough.
- Commercial Insurance: Intelligent Insurer released a great infographic on the future of commercial lines. It includes some interesting statistics following a survey of over 300 commercial insurers on their vision of the future for commercial lines. 85% of respondents confirmed they are investing in emerging technologies, with Advanced/Predictive analytics heading the list of the most transformative technology for commercial lines.
Managing General Agents
- New entrant: MS Amilin announced the launch of David Ashby Underwriting Limited. MS Amilin will act as the lead underwriter. As a result of this launch, Tom Clements, CEO of MS Amlin Underwriting, confirmed that the relationship will enable MS Amlin to retain its participation in the equine insurance market by underwriting via an MGA,
- Insurers appear to be turning away from internal technology development, preferring instead to forge new technology partnerships. The article Insurers turn backs on in-house solutions quotes both Aviva and Axa as examples of this trend.
Mergers & Acquisitions
- Sale of Violence and Terrorism MGA: Castel Underwriting Agencies sold their MGA Newbridge Risk Partners to Optio.
- Life Assurance: In yet another chapter of the ReAssure story, Quilter completes sale of assurance business to ReAssure. ReAssure has been hitting the headlines quite regularly. Initially after the parent group, Swiss Re, halted a planned flotation. Subsequently, The Phoenix Group indicated their intention to acquire the company.