October 24, 2019

Regulation, innovation and technology for insurance

Regulation, innovation and technology for insurance continue to dominate the industry. Recent news includes the focus by the Financial Conduct Authority on fair pricing practices and the value of insurance for customers. The focus of innovation is now firmly on delivering better outcomes for customers as well as efficiencies for the market.

Regulation:

Financial Conduct Authority (FCA) Regulation Round Up

  • Fair pricing practises: The FCA published their interim report on the General Insurance pricing practices. In summary, they found that competition “is not working well for all consumer”. The BBC demonstrated this conclusion with a case study headlined “Ten Years with my insurer meant a £2,000 hike”. Additionally, insurance experts commented on the interim report. Although they welcomed further consultation, they also warned of unintended consequences following the FCA dual pricing study. Feedback on this interim report is requested by 15th November 2019. The final report is due to be published in Q1 2020.
  • Mandatory annual update: From January 2020 all regulated firms will have to update and confirm the accuracy of details held by the FCA. As this must be done on-line via Connect, the Regulator urges all firms to register as soon as possible.
  • Fourth value measure pilot: The FCA have launched their fourth Value Measures Pilot. Participating insurers will report their value measures data from these three areas. Claims frequencies, claims acceptance rates and average claims pay-outs. Subsequently, the FCA will then publish their findings in Q1 2020.

Other Regulation information

Technologies in focus:

Automated cars

Blockchain

  • B3i begin to offer real solutions: We introduced B3i in our blog Blockchain-not just for the techies at the beginning of last year. At that time, we reported on their Proof of Concept (PoC) to create a Property Catastrophe XOL “smart contract” for excess of loss reinsurance. B3i have now moved on to offer Real-Life Industry Solutions. Although blockchain has sometimes been viewed as very theoretical, in reality, the tech is providing real solutions. In other words, “just stuff that works”.

Telematics:

  • Swiss Re and Pioneer collaboration: The parties have collaborated to develop a telematics solution that will be integrated into the Swiss Re telematics App, Colodide. The article Swiss Re and Pioneer to launch innovative telematics solution for insurers describes this technology for insurance as a ‘first-of-its-kind’. Coloride assigns a risk score to each driver that enables an insurer to calculate a usage-based insurance premium. In addition, by offering a financial incentive to cautious drivers and flagging risky behaviour, insurers can encourage responsible driving. The solution is to launch this solution in early 2020.

Insurtech:

  • Tech Collaboration:  Capgenini shared research into technology applications in the insurance market with their report Insurance/insurtech partnerships on the rise. The results show that the market is moving away from in-house development towards collaboration with third party tech-suppliers.
  • Plug and Play Insurtech European Program: The 14 start-ups for Batch Three include innovative solutions using AI; improved data analytics; content management and improved claims processing.

Other insurance topics in the spotlight:

Insurer News:

  • Zurich Innovation Championship: ‘Protecting the next generation’ is the theme for the second instalment of the Zurich innovation tournament. In the first place, Zurich are looking for bold thinking and ground breaking ideas that tackle challenges around climate, health, automation and other environmental themes.The competition has a closing date of December 17th, with details available here in Innovation Championship.

Managing General Agents:

  • Managing General Agents Association (MGAA) Initiative: Although Speed dating at the MGAA is not a headline you expect to see in the insurance market, the theme of the event was very relevant. Above all, the objective was to improve capacity in the market place. In many cases this was for the purpose of meeting a growing business need from the MGA market.

Claims

  • Personal Injury Discount rate: The recent decision that the Scottish personal injury discount rate to remain unchanged means that there is a significant difference between the -0.25% rate in England and Wales and the Scottish rate of -0.75%. Industry experts have voiced fears that claims will be raised in Scotland wherever possible as a result of this decision.
  • Drones: The potential of this technology for insurance industry is outlined in ‘How Drones are accelerating digital transformation in the insurance industry’ .  In reality, there is a long way to go before drone technology becomes mainstream for the insurance market, but this article demonstrates the possibilities.
  • Collaboration: Alongside the statistics from Capgemini and the collaboration of Swiss Re an Pioneer, we also have a further example of collaboration as Ageas UK partners with video claims platform SightCall. Using technology from SightCall, Ageas will enable their customers to stream live video from the claim to the claims consultant handling their case