Issues Paper on Increasing Digitalisation in
Insurance and its Potential Impact on
Consumer Outcomes

November 2018

Issues Paper on Increasing Digitalisation in Insurance and its Potential Impact on Consumer OutcomesApproved by the IAIS Executive Committee on 7 November 2018

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About the IAISThe International Association of Insurance Supervisors (IAIS) is a voluntary membershiporganisation of insurance supervisors and regulators from more than 200 jurisdictions. The
mission of the IAIS is to promote effective and globally consistent supervision of the insurance
industry in order to develop and maintain fair, safe and stable insurance markets for the benefit
and protection of policyholders and to contribute to global financial stability.
Established in 1994, the IAIS is the international standard setting body responsible fordeveloping principles, standards and other supporting material for the supervision of theinsurance sector and assisting in their implementation. The IAIS also provides a forum forMembers to share their experiences and understanding of insurance supervision and insurance
markets.
The IAIS coordinates its work with other international financial policymakers and associationsof supervisors or regulators, and assists in shaping financial systems globally. In particular, theIAIS is a member of the Financial Stability Board (FSB), member of the Standards Advisory
Council of the International Accounting Standards Board (IASB), and partner in the Access to
Insurance Initiative (A2ii). In recognition of its collective expertise, the IAIS also is routinely
called upon by the G20 leaders and other international standard setting bodies for input on
insurance issues as well as on issues related to the regulation and supervision of the global
financial sector.
Issues Papers provide background on particular topics, describe current practices, actual
examples or case studies pertaining to a particular topic and/or identify related regulatory andsupervisory issues and challenges. Issues Papers are primarily descriptive and not meant tocreate expectations on how supervisors should implement supervisory material. Issues Papers
often form part of the preparatory work for developing standards and may containrecommendations for future work by the IAIS.
International Association of Insurance Supervisors c/o Bank for International Settlements
CH-4002 Basel
Switzerland
Tel: +41 61 280 8090
Fax: +41 61 280 9151
www.iaisweb.org
This document was prepared by the Market Conduct Working Group in consultation with IAIS
Members.
This document is available on the IAIS website (www.iaisweb.org).
© International Association of Insurance Supervisors (IAIS), 2018.
All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated.

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Contents
Executive summary ............................................................................................................... 4
Acronyms .............................................................................................................................. 6
1

Introduction .................................................................................................................... 7

2

Product Design .............................................................................................................. 93

2.1

Digitalisation Impact on Product Design .................................................................. 9

2.2

Examples of digitalisation impact on product design ............................................. 10

2.2.1

Background ................................................................................................... 10

2.2.2

Shared economy............................................................................................ 10

2.2.3

Usage based insurance ................................................................................. 11

2.2.4

On-demand insurance ................................................................................... 12

Marketing, Sales & Distribution .................................................................................... 14
3.1

Marketing and promotions..................................................................................... 14

3.1.1

Benefits and opportunities.............................................................................. 15

3.1.2

Potential Risks ............................................................................................... 15

3.2(Robo) Advice ....................................................................................................... 17

3.2.1

Types of advice.............................................................................................. 17

3.2.2

Benefits and opportunities of robo advice ...................................................... 18

3.2.3

Potential risks ................................................................................................ 18

3.3

Price Comparison Websites .................................................................................. 19

3.3.1

Benefits and opportunities.............................................................................. 20

3.3.2

Potential risks ................................................................................................ 20

3.4

Disclosure and informed decision-making ............................................................. 21

3.4.1

Benefits and opportunities.............................................................................. 21

3.4.2

Potential Risks ............................................................................................... 22

4Supervisory issues ....................................................................................................... 24

5

Conclusion and recommendations ............................................................................... 34

Annex: Digital technologies and alternative business models affecting insurance business 35

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Executive summary
1.
Digitalisation is transforming insurance business. Examples such as mobile devices, theinternet of things (IoT), Big Data, artificial intelligence (AI), chat-bots, distributed ledger
technology (DLT), and robo advisors have an impact throughout the insurance value chain: fromthe design, underwriting and pricing of products, their marketing and distribution, through toclaims processing and the ongoing management of customers.
2.
The purpose of this paper is to consider the impact of the trend of increasing digitalisation
in insurance on consumer outcomes and insurance supervision in light of Insurance Core
Principle 19 on Conduct of Business. The focus is on product design and underwriting, alongwith marketing, sales and distribution aspects of the insurance value chain. It is recognised thatthe impact of digitalisation may differ between jurisdictions depending on the legal frameworks
in place.
3.
In respect of product design, digitalisation may affect the nature of insurance coveragethrough, for example, on-demand insurance, usage-based insurance and insurance based on
consumer-generated data from vehicles, homes or wearable devices. This can potentially
service a broader clientele (including people that are currently un(der)-served) if insurers areable to adapt to evolving demands from the market. The data available to insurers on use of,for example motor vehicles, will inform the pricing of the product, while consumers need to beaware of such use. Risk pricing can be more tailored to the use and risk profile of the customer,
which can affect both the price and required reserves of insurers.
4.
In terms of marketing and promotions, digitalisation will have an impact on theinformation provided to consumers. Regardless of the use of digital technology, the information
provided needs to be timely, clear, accurate and not misleading.
5.
Greater availability of customer related data, increased analytics and enhanced digital
deployment tools enable insurers and intermediaries to identify opportunities across theinsurance value chain to reduce customer friction, increase efficiencies and improve the overallcustomer experience through digital technology.
6.
The use of social media may enable insurers and intermediaries to better reach target
markets. This may reduce marketing costs. It can, for example, improve customers’ experienceby offering easier and quicker ways for the insurer and consumer to communicate. On the other
hand, social media applications may not be transparent to consumers. This can result in
consumers being “nudged” without being aware – such as when consumers are confronted with
unsolicited offerings based on their use of the internet. There is a risk that customers are
persuaded into buying products or add-ons that are not in their best interest.
7.
A specific emerging sales method is the use of robo advice. This may improveaccessibility of products to the customer. It will, however, require proper design of underlying
algorithms and adequate availability and use of customer data. Also, depending on thesophistication of the algorithm and available datasources, not all benefits of face-to-faceinteraction between salesperson and customer may succeed, for example, in identifying (nonverbal) hesitation. Furthermore, flaws in the design and operation of the algorithm can create arisk of selling products that are not (entirely) in the interest of the particular customer.
8.
Another development for promotion and sales is the use of price comparison websites(PCWs). These can provide automated suggestions or proposals on products, providers andprices based on input by the consumer. Increased accessibility and comparability of information
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on insurers and products as well as easy use of the on-line systems are benefits to the customer.
There may, however, be issues around transparency with respect to the identity andindependence of the owner/operator of the comparison website. Consumers may also be at riskof selecting products that are less suitable for their needs if they solely focus on price and notother elements of the product, such as its coverage.
9.
More generally, innovations influence the presentation and disclosure of information.
They offer the potential to provide relevant information to consumers in a useable manner at therelevant time. Large volumes of information may, however, be difficult to read and understand,for instance when using smart phones. Insurers should be mindful of the risk of misconceptions
by consumers and, therefore, flaws in consent given by digital means.
10.
As digitalisation changes the way insurance products are designed and distributed,
supervisors should monitor these developments, engage stakeholders both within and outside
the insurance industry and consider new supervisory responses to protect consumers’ interests.
One of the key challenges to supervisors will be to consider a balanced approach to facilitate
innovations while maintaining the level of consumer protection stipulated in laws andregulations. Supervisors are likely to be confronted with new insurance market participants, likestart-ups and “Big Tech” firms. These entities may have different perspectives on consumer
interest and compliance culture than traditional incumbent insurers. Supervisors should becognisant of this and may need to take a proactive approach including by “educating” these newmarket participants. Other challenges supervisors face are developing new tools and skills forsupervision of increasingly digitalised firms, enhancing cooperation with financial and otherauthorities, safeguarding the supervisory parameters to prevent regulatory arbitrage andenhancing information security.
11.
Supervisors should consider taking appropriate steps, such as issuing guidelines, to help
promote responsible use of new technologies by insurers and intermediaries and safeguard thefair treatment of customers.

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Acronyms
ACPR

Autorité de contrôle prudentiel et de résolution (France)

AI

Artificial Intelligence

AFM

Autoriteit Financiele Markten (Netherlands)

AMF

Autorité des marchés financiers (Québec)ASIC

Australian Securities and Investments Commission

BaFin

Bundesanstalt für Finanzdienstleistungsaufsicht (Germany)

BoE

Bank of England

DLT

Distributed Ledger Technology

FCA

Financial Conduct Authority

FINMA

Financial Market Supervisory Authority (Switzerland)

FinTechFinancial technology

FSB

Financial Stability Board

IAIS

International Association of Insurance Supervisors

ICP

Insurance Core Principle

Insurtech

Insurance technology

IoT

Internet of Things

IT

Information Technology

MAS

Monetary Authority of Singapore

ML

Machine Learning

NAIC

National Association of Insurance Commissioners (USA)

PCW

Price Comparison Website

RegtechRegulatory Technology

SuptechSupervisory Technology

UBI

Usage based insurance

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1

Introduction

12.
Described by some observers as the “fourth industrial revolution” 1, digitalisation is
rapidly transforming societies and their economies. The velocity and scope of change are
significant. Digitalisation has the potential to fundamentally change almost every industry inevery country. 2 One of those industries is insurance. There has been and continues to be arevolution in insurance pricing, marketing, product design and claims settlement resulting frominsurers' use of new technologies and available data.
13.
As diagram 1 illustrates, rapid change is evident throughout the insurance value chain:from the design, underwriting and pricing of products, their marketing and distribution, throughto claims processing and the ongoing management of customer relationships. The examples ofdigitalisation technologies – machine learning and artificial intelligence, distributed ledger
technology (eg blockchain) – and applications – telematics, robo-advisers, peer-to-peer andplatford business models – as set out in diagram one, are varied. These are described in the
Annex.
DIAGRAM 1: Digitalisation and the insurance value chain••••

Customer-specific “targeted”
marketing
Robo-advice, AI and chatbots
Internet sales and Price
Comparison websites
Social media and SMART
phone/device channels for
direct distribution

Marketing,Sales andDistribution

•

•
•
•
•
•

Pricing andUnderwriting

•

•

•

Automated (including nonhuman) product service
centers using robo-advice,chat-bots and AI
Big Data enables ability to
predict what customers want
and need before they ask foritContinuous real-time
customer communication andU/WProduct
Management

Telemetrics – customers and insurers
understand risk much better (wearables, IoT,
SMART phones, apps)
Big Data enabling more granular andaccurate pricing and faster U/W
Blockchain technologies to seamlessly
manage and instantly verify data sources
Peer-to-peer insurance models
Granular, customer-specific productofferings including usage based insurance
Genetic data – potential impact on pricing
and availability

•
•
•

•

ClaimsHandling

•
•
•
•

•

Platform business models
360 degree view of customer for
consultantsContinuous real time data
enabling focus on high value
customers
Unstructured data (eg voice)analysis and learning

CustomerInteractions

Fraud detection using Big Data andBlockchain
Blockchain facilitating trust-worthy andtimely claims information
AI and drones in assessing processes
Claims cost efficiencies re online/SMART
device claims lodgement, AI/automatedassessing, optimised pay-outs, reduced
labour costs
Supply chain management efficiencies,
vertically integrated claims processes

1 See for example,

Schwab, K., “The Fourth Industrial Revolution: what it means, how to respond”,
https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-torespond/, 14 January 2016.
2 Schwab.
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14.
The availability of data from sources such as telematics and wearable devices enable
insurers to design and price products on the basis of more information about the consumer.
Developments in artificial intelligence and machine learning enable the provision of automatedadvice and facilitate fraud detection. Comparison websites can provide consumers with more
information about the range of products available. New technologies are able to speed up
processes, such as claims handling, and can lead to efficiencies that drive down costs.
15.
Whilst digitalisation has the potential to benefit consumers, it does give rise to risks that
could impact fair consumer outcomes, which should be considered by supervisors in light of therequirements on Conduct of Business in Insurance Core Principle (ICP) 19. These include
potential impacts from reduced face-to-face contact, insufficient consumer understanding of the
product or service and its provider, risks in the security and potential misuse of increasing
amounts of consumer data, and potential exclusion for some consumers. The collection of dataon policyholders may enable a more granular risk categorisation that could potentially affect risk
pooling principles and may lead to issues around affordability of certain insurance products,
possibly even leading to exclusion. 3
16.
Supervisors should, therefore, (possibly in new ways) monitor consumer outcomes
carefully to ensure that supervisory regimes continue to facilitate the benefits to consumers fromtechnology and innovation, whilst safeguarding policyholder protection. This is vital if the intent
of ICP 19 is to be met.
17.
The purpose of this paper is to consider the impact of the increasing use of digitaltechnology in insurance. It will consider consumer outcomes and discuss what digitalisationmeans for insurance supervision. It is recognised that the impact of digitalisation may differ
between jurisdictions depending on the legal frameworks in place. A distinction should be madebetween applications and the data/information these applications use or generate. While thispaper cover both innovative applications and – more generally – the use of data, a separate
paper will discuss in more details the use of personal and other data from a conduct of businessperspective.
18.
This paper provides these considerations in the context of other IAIS work on FinTech
and Insurtech. Accordingly, this paper focuses on the product design and underwriting alongwith marketing, sales and distribution aspects of the insurance value chain. The impact of theincreasing use of digital technology on other aspects of the insurance value chain will be
addressed in other IAIS material.
19.

The paper has three sections:•

Section 2 considers the impacts of digitalisation on product design and underwriting.
This sections also gives examples of digitalisation impact on product design;•

In section 3, robo advice and price comparison websites are considered to illustrate
digitalisation’s impact on the marketing, sale and distribution of those products; and•Finally, in section 4, the paper describes the challenges faced by supervisors in
responding to these developments.

3 Paragraph 10 of the IAIS report “FinTech Developments in the Insurance Industry”, March 2017.

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2

Product Design

2.1

Digitalisation impact on product design

20.
Digitalisation is changing the risk landscape and creating the need for, and enabling, thedevelopment of new types and lines of products. Consumer needs are evolving in the digitalage with a growing expectation for accessibility of services and solutions at any time, in any
place, and in a variety of ways. Consumer trends and habits supported by new technologies,
such as greater connectivity through wearables, smart phones and smart homes, and greater
optionality through the sharing economy, are impacting the way insurers design products fortheir policyholders.
21.
The changes driven by new technology create new opportunities but also newchallenges and risks for insurers and intermediaries. The need for new insurance coverages
and new products is likely to grow. Digitalisation brings opportunities to better serve customers
and their changing needs, and may also serve as a means to better reach underserved markets.
22.
Digitalisation may also lead to a shift from distribution focused product design (supplydriven) to consumer focused product design (demand-driven). While this may provide great
opportunity, it may be a challenge for insurers to meet consumers’ growing need of covering
new risks, or covering them in a different way, in the future.
23.
Digitalisation is impacting how insurers develop, design and underwrite their products.
Advancement in technology may enable the development of more adaptable or tailored products
and the creation of new insurance products:
•

•
•

•

•

Big Data means more data for risk assessment, which can enable underwriting to be
based on more granular data, which may, in turn, increase accuracy and allow for fasterand more risk-specific underwriting. This needs to be balanced against the privacy
concerns of the individual;
AI may create new possibilities for risk assessment and underwriting. For example,
insurers can use algorithms in combination with AI that uses the customer’s insurance
history and lifestyle information to suggest insurance products and for onboarding;
The IoT may create new products focusing on prevention or situational insurance, forexample, a sensor will be able to monitor a household's water consumptions patterns,
detecting potential leaks and interrupting the flow before the basement is flooded, thus
preventing major damage and costly claims 4. Such tools can improve the interaction withand provide value to the customer, though they can raise concerns if data from devices(eg alerts) are used for premium increases or changes to existing coverage;
Telematics In the context of IoT, telematics involve telecommunications, sensors andcomputer science to allow sending, receiving, storing and processing data via
telecommunication devices, with or without interfering with or steering of remote objects;
and
DLT may be able to seamlessly manage and instantly verify data sources. Smartcontracts (ie programmes that automatically execute the claim payment under predefined conditions stored in the blockchain) have the potential to be fully digital and fully
automated products, as could be the case for agricultural parametric/index-based
insurance. 5 If this technology proves to be a viable tool, it could transform the insurance

Bain&Company, "Digitalization in Insurance: The Multibillion Dollar Opportunity", Henrik Naujoks,
Florian Mueller and Nikos Kotalakidis, March 20, 2017.
5 The Geneva Papers 2017: "The Impact of Digitalization on the Insurance Value Chain and theInsurability of Risks", Martin Eling and Martin Lehman, Institute of Economics, University of St. Gallen.
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industry through a shared, transparent record of contract-related information, enabling
all parties to have an immutable audit trail underpinning end-to-end underwriting andclaims governance without the need for an intermediary. 6
24.
In the following section, we consider these benefits and risks in the context of examplesof the impacts of digitalisation on product design.
2.2

Examples of digitalisation impact on product design

2.2.1

Background25.
There are numerous examples of digitalisation changing the nature of insurance
products. The following section provides examples of three of the most widespread andsignificant examples namely:•

Shared economy;•

Usage-based-insurance; and•On-demand insurance.

26.
These examples involve a fundamental change in the design of product. But there arealso examples of changes where digitalisation has facilitated small specific changes to productfeatures.
United Kingdom
UK-based FinTech start-up Cuvva was set up to address the gap of providing hourly car
insurance to infrequent drivers who wanted to borrow other people’s cars. Cuvva allows
customers to arrange cover via an app in seconds. Cuvva manages the sale, service andfirst notification of loss process through a mobile app.
Since launching the initial car sharing product, Cuvva has since launched a second
proposition designed for those who own a car, but seldom drive it. Customers pay a small
amount to insure their car whilst not driving, and pay an additional amount via the app forthe hours that they drive it.
Netherlands
Clixx (a product of Dutch insurer OHRA) offers the opportunity to insure also a borrowedcar. The product is bought per day. Clixx’ premium is lower if the borrowed car is alreadyfully insured, as compared to when the borrowed car only has the legally obligated liability
insurance.
2.2.2

Shared economy

27.
New sharing models are creating a unique challenge as traditional insurance protection
and coverage may not align with the needs and approaches taken in the shared economy. Many
insurance products currently offered are based on exclusive legal or economic ownership of agood. The shared economy is based on the shared use of goods. Additionally, traditional
insurance products are generally intended to cover personal or commercial use of a good; they
are not designed to cover part-time business use, whether compensated or not.

Strategic RISK Europe: "How digitalisation will transform the risk and insurance industry": Dieter
Goebbels, country manager Germany and regional manager Central Europe at XL Catlin.

6

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28.
The availability of insurance coverage adapted to the needs of the participants of theshared economy is important for the further development of the sharing industry, and for
acceptance by consumers. To grow the shared economy and adequately mitigate potential risk,
participants – providers and users – need appropriate insurance coverage.
29.
Currently, participants in the shared economy who try to obtain insurance coveragethrough traditional means may be faced with the impossibility of taking out coverage that fully
meets their particular needs. For example, drivers working for ride sharing businesses (Uber)and homeowners participating as a host in shared hosting services (Airbnb) have not always
been able to find adequate insurance coverage. Traditional protections covering vehicles andhomes generally did not extend to new businesses in the sharing industry where personal
property is used in part-time business. The insurance industry has already developed new
products to meet the need for adapted coverage.
30.
It is important for consumers to understand the differences and limitations of theirinsurance coverage when acting as either a provider or user in the shared economy. 7 Whenoffering products to consumers taking part in the shared economy, it is equally important for
insurers to be clear on such limitations. There is the risk of disruption and damage to thereputation of the insurance industry if products designed to meet the shared economy do notdeliver the same level of consumer protection as traditional insurance products.
2.2.3

Usage based insurance

31.
Digitalisation is already used in automobile insurance. In terms of product design, a
traditional motor vehicle insurance policy is joined with a data collection and analytics tool tocapture data generated by the vehicle. In some cases, UBI product design includes various
forms of real-time and after-the-fact feedback data transmission between the insurer and theconsumers. In terms of pricing, insurers’ model prices are based on vehicle-generated data,
which in turn is based on the use of a vehicle by the insured – including where, how, when andby whom the vehicle is driven. UBI also produces data used in claim settlements to discover or
corroborate the damage event.
32.
In order to obtain data on the use of a vehicle, insurers mostly use telematics throughwhich they may identify granular driving habits (eg distance travelled, hard braking, number oftrips, destinations). This data allows insurers to establish a rate more personalised to theindividual customer.
33.
Telematics can be app-based relying on a smartphone’s sensors and GPS signal,
making this functionality dependent on the underlying smartphone’s capabilities. However, thispersonalisation may have limits as the operation of the vehicle by a person other than thepolicyholder will affect their data and the calculation of their insurance premiums. Thus it isimportant that consumers have the information they need to be properly informed and makesound decisions about insurance products that use a UBI programme. In addition, consumers
should be aware of whether participation in such programmes is on a voluntary basis or not.
Information that may help inform consumers about the features of the UBI programme may
include things such as:•

programme eligibility criteria;

7 See NAIC White Paper, Insurance Implications of Home-Sharing: Regulator Insights and Consumer

Awareness (http://www.naic.org/prod_serv/IHS-OP-16.pdf).

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•type of data collected;•

use of data (eg as part of an investigation for the settlement of a claim; third parties towhom access and use of data has been granted);•

insurer employees who could have access to collected data;•

impact of data on insurance premium; and•period used for insurance premium reviews.

QuébecIn 2015, the AMF published a notice about its expectations regarding UBI programmes. Thisinitiative was intended to highlight, for insurers, firms and representatives offering non-life
insurance, the importance of effectively managing the risks associated with data sent via UBI
programmes used for automobile insurance underwriting. It also underlined the need to act
fairly in their dealings with consumers who participate in such programmes. 8
Netherlands
In the Netherlands, the sharing economy marks a trend of offering services that alreadyinclude an additional insurance. For example, the Dutch initiative Swapfiets (meaning “Swapbike”) offers the opportunity to lease a bicycle for a fixed amount of money per month.
Repairments are included, as well as getting a new bike if the original one gets stolen. The
customer does not have to arrange an additional insurance product.
2.2.4

On-demand insurance

34.
The emergence of the shared economy, underpinned by a changing attitude andbehaviour of new consumer groups such as millennials, is causing a shift in the product lines of
insurers that are trying to respond to the need for self-directed, tech-savvy and hyperpersonalised products and services. Historically, most insurance has been purchased for a fixed
period of coverage – typically six months or a year at a time. Insurers' systems and processes
have been developed around this type of product and coverage, with a few exceptions, such as
travel insurance. In response to both changing ownership models through the sharing economy
in which a consumer may use a product or good for a limited period of time but not own the
product, and changing consumer desires for coverage limited to more precise time frames (suchas insuring a bicycle only when being used), new market entrants and incumbent insurers are
responding by developing new products and by adapting existing product lines, pricing andcustomer service experience to create on-demand insurance.
Trov
Trov is a mobile app that allows users to collect and store information about theirpossessions including the value. It partners with insurers to enable users to insure specificpossessions for specified durations. Users can literally turn insurance coverage on and off
by sliding the appropriate option on their mobile phone. For example, they could choose to
insure their mobile phone only when they are out of their house.
35.
The key to on-demand insurance is that it is temporal in nature. It provides insurance
coverage for specific periods of time that can be turned off and on. Users identify when they
https://lautorite.qc.ca/fileadmin/lautorite/reglementation/assurances-instdepot/notice_automobile_usage-based.pdf
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need insurance and get coverage for a specific period to meet that need. The ability to insure“moments” enables consumers to tailor coverage so that they only pay for coverage that theyneed and to quickly alter insurance coverage to meet changing personal circumstances.
36.
However, users need to be constantly engaged by actively turning their coverage on or
off to obtain the benefits of on-demand insurance. Failure to constantly engage may result inbeing under or over insured. Insurers should be cognisant of this and build in controls to mitigate
the risks they pose, which could include:•

proactive messages to remind consumers that their coverage is still active or, perhaps
more importantly, inactive. AI and learning from behavioural economics could be used
to optimise this messaging;•systems that enable customers to turn coverage on and off for set periods on areoccurring basis. For example they could have insurance for a mobile activated when
they are out of their house and use location tracking to verify this; and•inbuilt terms and conditions that provide back-up coverage in those circumstances whencustomers inadvertently fail to turn on coverage.

37.
Issues that have been discussed in this section, notably the issues around the use ofdata, will be the subject of a seprate paper.

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3Marketing, Sales & Distribution

3.1

Marketing and promotions

38.
Consistent with ICP 19 (Conduct of Business) insurance products must be marketed andsold in a manner that pays due regard to the interests and needs of customers.
39.
Insurers and intermediaries should be required to provide timely, clear and adequate
pre-contractual and contractual information to customers. 9 Supervisors should apply to digital
insurance activities requirements on transparency and disclosure that provide an equivalentlevel of protection to customers as those applied to insurance business conducted through nondigital means. 10 Marketing and advertising through digital means offer new opportunities toinform and empower consumers but may pose certain additional challenges to the insurance
industry and supervisors alike and necessitate further consideration in terms of specificregulatory requirements or industry responses.
South Africa
The Insurance Policyholder Protection Rules were recently amended to ensure that the rules
relating to advertising and marketing would apply similarly irrespective of the medium used
for such advertising. The definitions of “advertisement” and “direct marketing” were clarified
and widened in scope as follows:“advertisement” means any communication published through any medium and in any form,
by itself or together with any other communication, which is intended to create public interestin the business, policies or related services of an insurer, or to persuade the public (or a part
thereof) to transact in relation to a policy or related service of the insurer in any manner, butwhich does not purport to provide detailed information to or for a specific policyholder
regarding a specific policy or related service“direct marketing” means the marketing of a policy by or on behalf of an insurer by way of
telephone, internet, digital application platform, media insert, direct or electronic mail in amanner which entails the completion or submission of an application, proposal, order,
instruction or other contractual information required by the insurer in relation to the entering
into of a policy or other transaction in relation to a policy or related services, but excludes the
publication of an advertisement
Australia
ASIC's Good Practice Guide on Advertising 11 covers digital advertising, including online
advertisements, video streaming, social media and microblogging. Some of the points
highlighted are:•the particular impact of advertising in a 'high trust' environment and the need to distinguishclearly between advertisement and other content (ie on blogs); and•that, while online advertising can be beneficial if it provides links to additional information
for customers, this cannot make up for any misleading impressions created by the initialad, and the need for balance in the promotion.

9 Standard 19.7

10 Guidance 19.7.23

11 See http://download.asic.gov.au/media/1246974/rg234.pdf

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ASIC has taken action against a number of potentially misleading social media
advertisements relating to self-managed super (pension) funds. 12
3.1.1

Benefits and opportunities

40.
Insurers and intermediaries are increasingly focusing on ways to improve marketing,sales and distribution and to increase their ability to reach customers by the same digitalisation
technologies as seen in product design, including telematics, AI and Big Data. One example is"targeted marketing"; the ability to develop specific marketing messages for individual
customers or potential customers.
41.
Digital marketing may reduce the marketing costs of the insurer or the intermediary,creating savings that may be passed on to the customer. The use of Big Data may result in abetter understanding of customers, which can inform personalised marketing and appropriate
levels of disclosures.
42.
Greater availability of customer related data, increased analytics and enhanced digital
deployment tools enable insurers and intermediaries to identify opportunities across theinsurance value chain to reduce customer friction, increase efficiencies and improve the overallcustomer experience through digital technology. Insurers and intermediaries can use enhanced
customer experience as product differentiation in marketing campaigns. For example, a Québec
start-up, Covera, 13 based its marketing strategy on its digital solution that promises to break outof the standard insurance renewal process, identified as a common painpoint for customers.
43.
The use of targeted social media campaigns to relay promotional material is a common
way of targeting particular customers, who are most active on social media platforms. Insurers
are tapping into this market by using social media to make marketing seem less like “coldadvertising” and more like information sharing, entertainment or “infotainment”. Examples in the
US include Gecko, Allstate’s Mayhem, and Progressive’s Flo, whose promotional mascots are
instantly recognisable to insurance customers and who all have their own social media
presence. 14
44.
To overcome fragmented communication with the policyholder, insurers andintermediaries can use digital devices and the Internet to connect with consumers throughout
the life of the policy, not only at underwriting or claim. For example, some insurers have started
to provide customers with prevention tools, such as a free water and humidity detector that
sends an alert by notification, text message or email if it senses a problem. Such initiatives arepart of the new digital brand marketing strategy. These tools are not designed to provide datafor determining premium or coverage, but rather to attract and retain customers.
3.1.2

Potential risks

45.
The use of social media platforms and other digital marketing campaigns as well as theincreased collection and use of data may increasingly lead to customers being “nudged” ordirected, including by advertising, without them being aware. For example,
insurers,intermediaries and third party marketers may “target the customer through specific
12 For example, see: http://asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-

041mr-asic-stops-potentially-misleading-smsf-social-media-advertising/
13 https://covera.ai/
14 http://www.digitalistmag.com/customer-experience/2017/04/13/social-media-in-insurance-marketingtoday-05030403
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search engines or click on sponsored links, or may channel customers by highlighting or limiting
particular information to produce certain actions from the customer. There is often a lack oftransparency in the existence and purpose of these practices.
46.
Targeted marketing through social media may, in some cases, become confusing forcustomers who may struggle with distinguishing neutral opinions on social media frompromotional material sponsored by insurers.
47.
Digital marketing and mobile based applications could also be used to respond in realtime to individual circumstances, including consumers’ emotions, such as when an individual’s
insecurity or want is heightened, or during key life events. In the context of insurance, where an
intangible product is intended to mitigate personal fears, this type of emotional framing may
pose a concern.
Singapore
An example of such small specific changes in Singapore is PolicyPal, a start-up that helps
consumers organise, understand and purchase insurance policies digitally through a mobile
app. PolicyPal graduated from the MAS sandbox and is now an insurance broker registeredwith MAS. 15
Australia
An example is the revelation in Australian media outlets that in May 2017 Facebook disclosed
to a major Australian bank that it could exploit the moods and insecurities of users for the
potential benefit of advertisers. 16 This followed media reports in 2012 that Facebook contributed
to a published study with the Proceedings of the National Academy of Sciences of the USA
where it showed via an experiment on over 689,000 users that it could make people morepositive or negative through a process of what it described as "emotional contagion" – when
positive expressions were reduced, people produced fewer positive posts and more negative
posts; when negative expressions were reduced, the opposite pattern occurred. 17
FranceFrench 2016-R-01 Recommendation on the use of social media for business purposes
To remind professionals of supervisory expectations and to explain how rules apply to the useof social media, the French Autorité de contrôle prudentiel et de résolution (ACPR) issued arecommendation in November 2016, that applies to the banking and insurance sectors from 1
October 2017.
Firstly, advertising material issued through social media has to fulfil the applicable rules
regarding the information disclosed and the presentation of this information.
Secondly, professionals should refrain from having unfair commercial practices when usingsocial media. For instance, misleading opinions (good or bad) issued by professionals on social
media should be avoided, as well as the practice of buying “likes” or “followers”.

16 https://www.theguardian.com/technology/2017/may/01/facebook-advertising-data-insecure-teens
17 See: http://www.pnas.org/content/111/24/8788.full

https://www.mckinsey.com/industries/financial-services/our-insights/insurtech-the-threat-that-inspires
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Moreover, according to the ACPR recommendation, professionals should set up procedures on
the disclosure of content on social media. 18
48.
The promotion of “add on” insurance products during the sales of another product has
been on supervisors’ radar for a while. The use of digital means to market and sell insurance
products can nevertheless facilitate these practices. A common example is offering travel
insurance during the online sales process for airline tickets. In this example, whilst it could be in
the customer's interest to be informed of travel insurance options, the timing of the promotion at
the end of the sales process when the customer has already bought the airline ticket(s), and theway in which the message is delivered, could result in customers believing that the purchase of
the add on insurance product is required before the primary purchase of the airline ticket(s) can
be completed. This creates the risk of passive purchases and of the purchase of a cover that is
not needed.
United Kingdom
In 2014, the FCA conducted a market study on the General Insurance Add-Ons. The market
study found that the add-on distribution method has a real impact on consumer behaviour
and affects consumer decision-making. Consumers often focus on the sale of the primary
product, leading many to purchase add-on products that they do not need or understand. The
FCA also found that consumers had poor awareness of what products they had bought – with
19% being unaware that they owned the add-ons considered in the market study. The findings
indicate that consumers’ ability to make choices is often hindered by insufficient information
being available about the quality and price of the add-ons, and by this information being
presented too late in the buying process. Following these findings, the FCA has implemented
two remedies to address these specific issues:• A ban on opt-out selling; and• Improved information provision for add-on buyers.
3.2(Robo) advice

3.2.1

Types of advice

49.
Robo advice is essentially financial advice that is automated. In practice, a distinction
can be made between the following types of advice:
•

•
•
•

Full robo advice: the robo adviser completely takes over the work of the traditional
financial adviser. The “customer journey” is fully digitalised and the advice is fully
automated. The only human role is to develop and maintain the robo advice system andto prevent malfunctions of the algorithm. There is no face-to-face contact;
Partial robo advice: the advice is fully automated, but the traditional adviser is stillavailable to answer questions;Hybrid advice: the robo adviser and human beings interact with each other. For example,
the “customer journey” is fully digitalised, but the advice is still provided by a human,possibly face-to-face; andTraditional face-to-face advice: technology is only used as an additional tool, for example
to show graphs or animations.

18 For more information, see (in French): https://acpr.banque-france.fr/fileadmin/user_upload/acp/publications/registre-officiel/20161116Annexe_Reco_2013_R_01.pdf
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3.2.2

Benefits and opportunities of robo advice

50.
Robo advice has the potential to improve both the accessibility and consistency offinancial advice. Accessibility means that financial advice is easily accessible for the majority of
consumers. This includes the continuous availability of advice from one’s home, which may also
reduce the costs for the consumer. Furthermore, the consistency of advice can be improved
through use of technology. When new financial products become available or when productconditions change, the algorithm can instantly take these changes into account. When
programmed correctly and using sufficient and accurate data, robo advice will consistently beof the same quality. The robo adviser may be helpful in overcoming cognitive bias or insufficientcompetence on the part of the human adviser. Another potential benefit of robo advice is that
customers may find disclosing pre-exiting conditions, such as mental health, easier to do to amachine than a human adviser. This could encourage more disclosures, leading to customers
receiving more appropriate coverage.
51.
Robo advice can be considered as another form of distribution in addition to internet or
telephone-based sales, potentially without providing advice to the customer. Robo advice canalso be part of enhanced consumer communications throughout the life of the product.
52.
As with traditional advice, robo advice should have a solid audit trail.By its very naturerobo advice will produce an audit trail through the technology used, rather than requiring this tobe completed manually. Provided that the technology delivers an audit trail that is reliable andof good quality, robo advice could therefore make it easier to deliver traceability and auditabilityof advice . For all advice given, the provider of robo advice should be able to provide insight into
the data used, the algorithms used and the information presented to the customer. This would
make the robo advice traceable and reproducible allowing the customer, any other subsequentadviser and the supervisor to check how the advice was established.
Robo advice in the Netherlands
In the Netherlands, robo advice has been available for a couple of years for different typesof financial products. However, until last year, robo advice was only available for noncomplex products, such as car insurance. Since 2017, robo advice is also being developed
for complex financial products, such as disability insurance. One of the challenges, according
to the developers, is making sure that customers completely understand what is meant byspecific questions posed by the robo advisor, since there is no human advisor present toanswer questions.
3.2.3

Potential risks

53.
According to ICP 19 advice provided to consumers should take into account thecustomer’s disclosed circumstances. All advice should be communicated in a clear and accurate
manner, comprehensible to the customer. Where advice is provided, this should becommunicated to the customer in written format, on paper or in a durable and accessible
medium, and a record kept in a “client file”. 19
54.
However, there may be specific issues that need to be addressed to safeguard the fairtreatment of customers who use robo advice. Robo advice cannot solve every limitation of
traditional face-to-face advice. Robo advice does not, for example, overcome problems flowing
19 Guidance 19.8.6

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from limited selection of available products. Nor will it overcome all the problems caused by thecomplexity of products.
55.
When the advice is fully automated, the customer might not have the opportunity to ask
questions, unless programmed in a robo chat. The risk of misunderstanding is therefore morepresent in robo advice than in face-to-face advice. The lack of interaction between humans
might also lead to a reduced detection of contradicting answers by customers.
56.
A human adviser can recognise when the customer is in doubt, which a robo adviser
may not be able to do. However, robo advice tools could be programmed for that purpose – orexample, the algorithm could detect when a customer continuously clicks back and forth
between pages and prompt a pop-up, asking the customer whether he needs additional help or
explanations. Detecting doubt is, however, one of the more challenging aspects of robo advice.
57.
As in conventional advice, in a fully automated advice process the customer is
responsible for its own subsequent decisions. However, in the case of face-to-face advice, theadviser can discuss the customer’s hesitation to follow the advice with that customer andpossibly remove any doubts or concerns, while a fully automated concept cannot. Therefore,
there may be merit in limiting the possible deviations from the advice in a fully automatedprocess. This could prevent consumers making suboptimal choices in exchange for a lower
insurance premium.
58.
An incorrectly programmed algorithm can have far-reaching consequences. It istherefore important that an algorithm is carefully developed and tested before it is used inpractice, and that it is subsequently subject to adequate maintenance. The design of thealgorithm of the robo advice needs to be such that the output treats the customer fairly. A faulty
algorithm or defective AI tool can lead to inconsistent advice or consistently bad or improper
advice. Such tools and the data they rely on can also potentially further reinforce or perpetuate
existing biases.
3.3

Price comparison websites (PCW)59.
Price Comparison Websites (also known as Digital Comparison Tools) in insurance arewebsites that present multiple insurance products and providers of insurance, thereby enabling,in principle, consumers to compare and select products from an array of insurers and/orintermediaries. After selecting a product to purchase, the website could direct the customer tothe website of the insurer or intermediary to complete the transaction.
60.
PCWs are currently well established in many jurisdictions for many products andservices such as electricity utility and air tickets. They are now also a key distribution channel
in some insurance markets.
61.
Whilst various methods of remuneration exist, most PCWs are remunerated by the
insurer or the intermediary for any successful transaction usually via a fixed amount per policy.
The PCW will usually not own the customer relationship, which is a significant difference fromother types of intermediation.
62.
The supervision of PCWs varies across jurisdictions depending on the activities
performed and the PCW’s business model and they may be considered as intermediaries. In
some jurisdictions PCWs need to comply with insurance intermediary requirements.

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3.3.1

Benefits and opportunities

63.
By bringing together product and price information in a single place, a potential benefitof PCWs is that they empower a consumer to quickly compare, assess and select amongproducts available in the insurance market. If this potential is accomplished – reliable
information is objectively presented with related educational tools – PCWs promote competitivemarkets by empowering consumers. PCWs further facilitate consumer shopping by being
accessible at any time, from anywhere, although most insurers offer websites for their productswith similar access. Another benefit of PCWs for consumers is the ability to enter their personal
information once to receive personally-relevant products and prices from multiple vendors – aclear advantage to entering personal information every time when shopping across different
insurers' websites. In this respect PCWs can promote competition as well as reduce marketingand underwrting costs which could result in lower insurance premiums.
3.3.2

Potential risks

64.
Some of the risks – such as consumers having to self-direct and inform themselves
without further assistance – are common to those of digital sales via the website of an insureror an intermediary. However, there are a number of particular risks. For example, a risk with
PCWs is non-disclosed conflicts of interest due to compensation arrangements or ownership
structures with particular providers shown on the web site. Such conflicts of interest can cause
the website to present only some products and/or guide consumers to products that are in theinterest of the website and not the interest of the consumer.
65.
PCWs that are not subject to specific disclosure requirements may lack of transparency.
The lack of transparency may relate, for example, to potential conflicts of interest, tocompensation arrangements with providers or to the true identity of the PCW owner/operator orproviders. This could affect adversely the ability of consumers to make informed decisions.
Consumers are generally not aware of the number of suppliers consulted during a given productcomparision and the criteria used to establish a recommendation (if the PCW is permitted tomake recommendations). Consumers may believe the PCW is providing objective and complete
information when, in fact, the PCW is providing limited and biased information that channels theconsumer to a specific product.
66.
Another major risk is that consumers focus only on the price to select a product and, asa result, are not adequately covered because they bought a product that does not meet theirneeds. There is also a risk that consumers buy unsuitable products based on the results
provided by a PCW because they believed they were receiving some form of advice, and/or that
all results shown met their cover needs.
67.
Specific risks have been identified in the use of PCWs that can create harm for
consumers including unreliable performance or disorderly failure (for example, caused by atechnology and/or data failure). Due to the volume of transactions generated through a relativesmall number of PCWs, an issue with one PCW such a failure in the algorithm to present thecorrect results or a display of inaccurate information about a product can have a far-reaching
impact and, in markets where PCWs play a big role, can even create a systemic issue across a
specific product line.
68.
It could be expected that if one PCW fails, others will pick up the market segment.
However, in some markets, concentration in certain segments/product lines may create harm
to consumers if there is a lack of availability of other PCWs.
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Netherlands
In 2014, the AFM issued a press release on the quality of PCWs.
The main findings were:• Overall, the services of PCWs were found to be in the interest of the customer, based on
research on the five main PCWs in the Netherlands. Usually, comparisons are ranked on
both price and quality, based on the preferences of the customer;• There were no signals that the overall comparison was based on payments of insurers.
However, often an insurer would only end up in the top 3, if the consumer was able to close
the product via the PCWs – which in turn was only possible if commissions are paid; and• The main points of improvement were the provision of information, the way the top 3 isconstructed, the inclusion of one-off discounts in the premium and default preferences.
In 2018, the AFM issued another press release on the services of PCWs.
• The main finding was that PCWs sometimes provide financial advice, while advertising
their services as execution only. Their customer onboarding, however, is not suitable forfinancial advice, as PCWs are based on execution only and therefore contains a limited
set of questions. The consumer, however, might get the impression that financial advice
was given;• An example of a PCW giving advice, is presenting “the top 3 best suitable mortgages foryou”. This can qualify as financial advice, but it would not be compliant with the advice
rules, as there is no adequate customer onboarding; and• In 5 Q&As, the AFM explained when the services of PCWs would qualify as financial
advice. Some market players will move from execution only towards robo advice in thenext couple of years.
3.4

Disclosure and informed decision-making

69.
Standard 19.7 requires insurers and intermediaries to provide timely, clear and adequate
pre-contractual and contractual information to customers. Product disclosure is a key
requirement that needs to adapt to new digital channels and habits.
3.4.1

Benefits and opportunities

70.
One of the advantages of online services is that providers can use visual information todisclose features of a product. For example, the course of the premium over time can bepresented in a manner that is easily understandable and easily adjustable when the customer
enters new information, for example using graphs. The same goes for other product features.
Providers can experiment with the best way to disclose information to their customers, tomaximise the intelligibility thereof.
71.
Chatbots 20 may also assist when a customer takes too long to scroll past a certain
section or moves too quickly across a material term of the policy. This could indicate that thecustomer is looking for additional information or further explanation either by the bot or by anadviser depending on the complexity of the policy.

20 A computer programme designed to simulate conversation

Internet.

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72.
Technologies may utilise customer data to introduce relevant disclosures based on theinformation obtained about the customer from different data sources. Examples of such “virtualor cognitive customer service representatives” or chatbots include UK based Spixii, which“speaks” six languages or Flamingo’s “Rosie” in Australia which “learns from your business” inorder to respond to customers. 21
United States
The US based insurer Lemonade used two types of artificial intelligence or “cognitive”
systems to interface with customers. One is called “Maya” which signs up customers via
mobile devices and the other is called “Jim” which finalises claims without any assistance.
Insurify is another example which uses Evia (“Expert Virtual Insurance Agent”) and uses
natural language and image recognition to collect auto insurance quotes. Customers canalso engage with Evia when it comes to clarification of terms.
73.
“Comprehension testing” through technology may assist with obtaining certainty that thedisclosed information is adequate and that the consequences thereof are properly conveyed tothe insured. Technology, particularly machine learning and chatbots, can be used as an enabler
for customer comprehension. Online filter and quick test questions may also assist with gauging
the customer’s understanding. There may be a need to educate online users to dedicate
sufficient time to an adequate understanding of the contents of the agreement.
74.
The means of presentation (for instance through dedicated popup windows) can play animportant role in ensuring proper understanding of the information by customers and obtaining
explicit consents when appropriate. In addition, gamified product sales information – whereby
information is disclosed as part of game or challenge – can keep a consumer interested andengaged so that critical information that might otherwise be overlooked is seen, understood andretained by the consumer.
3.4.2

Potential risks

75.
The time efficiencies and instant gratification associated with digitised transacting meanthat customers expect a relatively quick transactional experience, particularly in instances where
smartphone applications are being used. This poses significant challenges for insurers inmaintaining a balance between convenient, seamless contracting versus the risk of inadequate
disclosure of material policy terms and conditions.
Netherlands
In the Netherlands, supervision of the intelligibility of products is part of the product approval
process. Also, in online services, customers are often obliged to read information and to
confirm the information is understood. It nevertheless remains a risk that customers do not
fully understand the details of a product before providing this confirmation. The supervisor
therefore encourages parties to write their product conditions in such a way that these arecomplete, but as easy to read and understand as possible.

21 https://www.digitalpulse.pwc.com.au/how-insurtech-will-make-you-love-your-insurer/

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76.
In contrast to face-to-face interaction, digital interaction can make it difficult to flag
misunderstandings and the need for more explanations based on non-verbal communication.
77.
In a digital context, customers are faced with a plethora of information from different
sources. It can be difficult to identify reliable product disclosures in a manner that is appropriately
presented, and differentiate between product disclosure and marketing. In addition, digital tools
can be used to highlight information that is relevant but can equally be used to downplay
information in a way that creates a risk of consumers choosing an inappropriate product.
78.
As with non-digital information and disclosure, consumers face the risks of information
overload from too many sources with no means to ascertain the accuracy or legitimacy of theinformation.

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4Supervisory issues

79.
Digitalisation is not only transforming the insurance industry but society itself. Forsupervisors it presents a “moving target in a moving environment”. As digitalisation changes theway insurance products are designed, marketed and distributed, supervisors should monitor
these new developments and engage stakeholders both within and outside the insurance
industry to protect consumers’ interests. This includes non-traditional stakeholders such as
cloud service providers and data vendors. In short, new developments / the shift in risks will
require new supervisory responses that are delivered in an adequate way. Some of the key
challenges are described below.
80.
Consumer outcomes: For supervisors in a digitalised world it is crucial to understandhow incumbent insurers and intermediaries as well as newer insurance market participants,
including Insurtech start-ups and Big Techs, are behaving with impact on outcomes for
consumers. Digitalisation and use of data have the potential to benefit consumers, but also
create risks of unfair treatment, discrimination, or concerns over access to, or exclusion from,insurance services. Measuring and assessing these outcomes is challenging. Supervisors
should consider monitoring behaviour and outcomes by examining information from multiple
sources.
Australia
In September 2017, ASIC launched its 2017-18 Data Strategy. With the tag-line:“Connecting the dots to achieve better regulatory outcomes, “its purpose is to describe
ASIC’s vision for data, its objectives and an approach to improving how it captures, sharesand uses data. 22
Germany
BaFin launched an internal project in 2015 to learn more about the business model oftechnological start-ups (FinTech s) and their appearance on the market. Drawing on
expertise from the areas of banking, insurance and securities supervision, the objective of
the project group was to observe the latest developments in the FinTech market, and toreview whether BaFin needed to adjust its processes in view of new developments in thearea of digitalisation. As a result of this project, BaFin established an Innovation Hub. This
Innovation Hub analyses and evaluates upcoming technological solutions and new businessmodels based on those solutions.
Additionally, the Innovation Hub coordinates a network of experts from various areas of
responsibility within BaFin, which rates innovative business models with regard to regulatory
requirements. Experts from banking, insurance and securities regulators are represented in
the network, as well as from the licensing and the pursuit of unauthorised businessdepartments. The combination of experience and expertise from ongoing oversight andreview of licensing requirements allows rapid assessment of innovative business models
and processes that may not be unique to one department.

http://download.asic.gov.au/media/4479255/asic-data-strategy-2017-20-published-19-september2017.pdf
22

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Québec
AMF has created a Fintech Lab to deepen the AMF’s knowledge of new business models
and underlying technologies, explore the current and potential applications of thesetechnologies and explore how the AMF itself can use them.
FranceIn 2017, the French central Bank launched The Lab. As an open space for discussions andcollaborative work, the Lab links up the Banque de France with various initiators ofinnovative projects – start-ups and FinTechs, institutional players, universities – in order toexperiment with new concepts and technologies in connection with the activities of theinstitution. The Lab is working on technologies such as blockchain (MADRE project), IoT,
IA etc.
The ACPR is developing a new tool for supervising business practices:••

A database of the innovations of the insurance sector, which enables monitoring oftechnological innovations, new services as well as guarantees offered; andA web listening platform with an internal analysing tool to capture online messages fromconsumers concerning bad market practices.

In March 2018, the ACPR launched a Task Force to tackle the opportunities and challenges
raised by AI in the financial sector. This Task Force (TF) is composed of banks, insurancecompanies and FinTechs. It also includes other authorities such as the Data Protection
Authority. The primary goal of this TF will consist of issuing a Discussion Paper before endof 2018, aiming at summarising the implications of using AI technologies in the financial
sector.
United Kingdom
In 2014, the FCA launched its Innovate department which is committed to encouraging
innovation in the interests of consumers. Innovate provides assistance to firms which areusing innovation to improve consumer outcomes, and helps firms better understand the
FCA’s rules, processes and guidance. Innovate helps the FCA keep ahead of developing
trends and potential harms in the market.
United States
In 2018, the NAIC and US state insurance supervisors launched a three year strategic plan,
State Ahead, to drive their efforts, resources and attention to meet ongoing challenges,
including the rapidly evolving marketplace fuelled by seismic shifts in consumer behaviourand huge technological advances. As part of the goal to ensure consumer protection keeps
pace with changes in the marketplace, one objective is to optimise use of market data andregulatory processes to enhance consumer protections, including:• rebuilding the NAIC's Market Conduct Annual Statement (MCAS) application, as well as
those applications utilising MCAS data, as a cloud-based solution;• implementing a business intelligence tool with self-service capabilities;• creating an enterprise market data strategy and analytics data warehouse; and• rebuilding the NAIC's Consumer Information Source (CIS) application.
Additionally, US state insurance regulators are trying to gain a good understanding of new,innovative insurance products and services, including the manner in which they impact
consumers and other stakeholders in the insurance marketplace. Accordingly, the NAIC
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established the Innovation and Technology Task Force in 2017 to help insurance regulators
stay informed on key developments, including new products and services from start-up
companies, as well as established insurance industry players. Under this Task Force, theNAIC's Big Data Working Group is charged in part with assessing data needs and required
tools for state insurance regulators to appropriately monitor the marketplace and evaluate
underwriting, rating, claims and marketing practices. This assessment includes gaining abetter understanding of currently available data and tools, as well as recommendations for
additional data and tools, as appropriate. Based on this assessment, the Working Groupwill propose a means to collect, house and analyse needed data. 23
81.
Need to balance innovation and conduct concerns: Digitalisation and innovation
have enormous potential to help insurers and intermediaries build cultures of compliance,
identify potential consumer harms and improve outcomes for consumers. However, it could alsopose significant risks that could lead to consumer harms if not properly managed. These could
include technological exclusion, discrimination, and accessibility and affordability issues. 24 Oneof the key challenges to supervisors will be to consider a balanced approach to facilitate
innovations by insurers while maintaining the level of consumer protection as stipulated in its
laws and regulations.
Australia
ASIC’s Innovation Hub drives much of the Australian conduct regulator’s support for
digitalisation and engagement with FinTech and Insurtech companies.
Through the Innovation Hub, ASIC provides informal assistance to Insurtechs on theirregulatory obligations, the overarching regulatory framework and, as appropriate, options
relating to ASIC’s exemption powers.
Germany
BaFin’s Innovation Hub serves – besides other responsibilities – as a communication platform
for incumbents and start-ups. One of its main aims is to gather and spread knowledge. For
example: There is a special contact form on BaFin’s webpage through which company
founders and FinTechs can submit preliminary inquiries or concrete questions about eg
business models. The term "contact form" may seem a bit old fashioned, but contributes tothe efficiency of the communication: It serves to quickly determine the responsible section for
the respective business model body within BaFin – for a public authority with about 2.700
employees, this is a decisive factor.
FranceIn 2016, the ACPR launched a FinTech Innovation Unit. It is the point of entry of financial
start-ups for their licensing process. The Unit evaluates the opportunities as well as the risks
related to innovations in the financial industry and gives recommendations on where
adjustments need to be made in the current regulation and in supervision practices. The
ACPR is coordinating its actions with the Securities & Markets Authority (SMF). They haveboth launched the Fintech Forum in 2016 which is leading a dialogue with FinTech
professionals regarding regulation and supervision.

23 https://www.naic.org/state_ahead.htm

24 Many of these issues are addressed in the Application Paper on the Use of Digital Technology inInclusive Insurance (November 2018).

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Québec
The AMF has created in 2016 an external advisory committee, the Technological Innovation
Advisory Committee that has the mandate to assist the AMF in identifying and analysing
trends and issues and help ensure a balance between consumer protection and market
efficiency.
Switzerland
FINMA has been working on the challenges presented by FinTech regarding authorisation,
supervision and regulation. Innovative trends and ideas require a solid framework within
which to operate, while clients and the financial system as a whole need protection during
this shift in direction.
FINMA regards innovation as key to the competitiveness of Switzerland’s financial centre, but
adopts an essentially neutral approach to certain business models and technologies. It
therefore reviewed whether specific provisions in its ordinances and circulars disadvantaged
some technologies and concluded that very few such obstacles existed.
An increasing number of financial intermediaries interact with their clients via internet andmobile devices. FINMA has therefore been enhancing the regulatory framework to facilitateclient onboarding via digital channels. In its new circular, the anti-money laundering due
diligence requirements are explained in the context of digitalisation of financial services andthe need for technology-neutral regulation, particularly with respect to video identification. The
circular came into force on 18 March 2016.
Before launching operations, FinTech companies must establish whether they are subject toanti-money laundering and authorisation requirements.
In general, authorisation for insurance is required if risks and dangers for clients are insured.
If services are rendered voluntarily and without any contractual obligation, authorisation might
not be required.
United Kingdom
The FCA launched its regulatory sandbox in 2016. The regulatory sandbox is a space in whichfirms can apply to test innovative propositions in a live environment, with oversight and input
from the FCA. Firms testing in the sandbox are required to meet all relevant regulatory
requirements, and bespoke safeguards and mitigants are built into each testing plan. The
sandbox aims to enable firms to get to market to test their propositions at a faster speed andreduced cost, and also gives the FCA an understanding of the opportunities and potential
harms that innovation can create in the market. Almost 90 firms have been supported acrossthe first four cohorts of the FCA’s sandbox, including a significant number from the insurance
sector.
82.
Supervisory skills and tools: Supervisors should become “data driven” and “digitalintelligence-led”. Supervising market conduct in a digital world requires different skill sets, inaddition to those of lawyers, economists, actuaries/mathematicians and data scientists.
Interdisciplinary supervisory teams will be vital in a digitalised world. Supervisors should betechnologically and numerically literate and understand the risks associated with data.
Supervisors will need new skills to identify, monitor and assess new applications oftechnologies, for understanding market structures and the activities of new participants, and forunderstanding consumer outcomes. They can arrange to have this knowledge and skill wihin
their own staff or – if this is more efficient – use third party providers. Lawyers, economists,
actuaries/mathematicians and data scientists will need to work together to supervise insurance
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markets. In this respect supervisory authorities will need to reconsider what qualifications andskill sets they need to become “fit for the future”. They will continue to compete for talent within
the industry.
Germany
IT specialists have been part of supervising teams for a while. But in order to better prepare
itself for the challenges posed by inter alia IT and cyber risks, BaFin set up a separateorganisational unit for IT supervision in the financial sector as of 1 January 2018.
QuébecAMF has created a dedicated internal working group of experts on FinTech, involving morethan 60 employees working in cross-functional teams.
FranceAlongside the creation of dedicated teams/hubs, the Central Bank has appointed a Chief
Digital Officer (CDO) in charge of the digital transformation of the institution, who is also
Chairing the innovation Lab.
United States
As part of the NAIC and US state insurance supervisors' State Ahead strategic plan, the themeof consumer protection and education recognises the need to stay abreast of new
developments in the area of innovation and emerging technology and the need to become
more engaged in the areas of InsurTech and Regtech. Opportunities being explored to further
this objective include providing forums and programmes for state insurance regulator
education and discussion regarding changes in the insurance marketplace, including
innovation and technology; convening an Autonomous Vehicle Insurance Forum withstakeholders to discuss insurance regulatory issues related to autonomous vehicles; andconsidering the creation of a cybersecurity insurance institute.
Additionally, the NAIC's Innovation and Technology Task Force is charged, in part, withdiscussing innovation and technology developments in the insurance sector, including thecollection and use of data by insurers and state insurance regulators – as well as new
products, services and distribution platforms – in order to educate state insurance regulators
on how these developments impact consumer protection, privacy, insurer and producer
oversight, marketplace dynamics and the state-based insurance regulatory framework.
83.
In particular, supervisors will need the skills to understand how digitalisation can result
in consumer harm. For example, supervisors may encounter challenges in supervising the (selflearning) algorithms that underlie the automated decisions made in a digitalised world, which is
not only problematic from a consumer protection perspective but also from a risk management
perspective.

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Robo advice
Robo advice provides a useful case-study on many of the issues pertinent to supervisors. As
a result, many supervisors have recently published guidelines on how they are approachingrobo advice including:•Germany:https://www.bafin.de/EN/Aufsicht/FinTech/Anlageberatung/anlageberatung_no
de_en.html;•

Australia: https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg255-providing-digital-financial-product-advice-to-retail-clients/; and•Netherlands:
https://www.afm.nl/~/profmedia/files/onderwerpen/roboadvies-sav/viewrobo-advice.pdf.

•

United Kingdom: The UK’s FCA launched its Advice Unit in May 2016 to provide
regulatory feedback to firms developing automated advice or guidance models across a
range of sectors, including insurance. Feedback focuses on helping the firm understandthe regulatory implications of their model. The FCA also publishes tools and resources for
all firms developing automated advice or guidance propositions, based on its experienceswith individual firms.

In developing guidelines, supervisors have needed to consider how the quality of the advice
provided is measured and verified. Should supervisors directly supervise the algorithm?
Should supervisors supervise and monitor the outputs – ie the advice itself? Shouldsupervisors require insurers and intermediaries to self-audit and provide it with annual
assurances that the advice its robo advisers are providing is appropriate? Should it require
insurers and intermediaries to engage external experts to conduct those audits?
Depending on how they address these questions, supervisors may need to establish
dedicated teams to address such technical matters involving IT specialists with the required
knowledge.
As with non-digital advice, supervisors need to mandate that insurers and intermediaries
adopt appropriate document management strategies. This includes retaining all versions of
the algorithm themselves. The robo adviser needs to save the algorithm, the used data andthe information and advice that has been provided to the customer.
84.
Supervisory authorities should consider how to embrace new technologies to help carryout supervision, also referred to as Suptech solutions. 25
Germany
In the first half of 2018, BaFin has published a report on Big Data and AI together with
Partnerschaft Deutschland, the Fraunhofer Institute for Intelligent Analysis and Information
Systems and the Boston Consulting Group.
https://www.bafin.de/SharedDocs/Downloads/EN/dl_bdai_studie_en.html
With advancements in key technologies, increasing data availability and decreasing entry
barriers into the usage of Big Data and AI solutions, both incumbent institutions and new
25 Suptech is the use of technological innovations (or FinTech) by supervisory authorities. Regtech: theuse of technological innovations (or FinTech) for compliance purposes and reporting by regulated
financial institutions.
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market players are able to structure their work processes more efficiently and develop new
business models. Supervisors, however, are facing new challenges as the use of Big Data
and AI impacts the financial markets. The aim of the report was to gain a better
understanding of these challenges. The report highlights the implications of technologydriven market developments from various regulatory and supervisory perspectives.
The six main observations and their implications can be summarised as follows:
1. The financial data innovation race is already underway. Systematic dependencies on
Big Data and AI companies could develop outside the regulatory framework in thefinancial system.
2. Black-box modelling is spreading. But black-box modelling must never stand in the wayof a proper business organisation.
3. Big Data and AI accelerate the further automation of the process. But the responsibility
will always remain with the senior management.
4. The “transparent customer” is more than just a phrase in the age of Big Data and AI. Big
Data and AI must be used for the customers, not against them.
5. Consumer confidence is a catalyst for Big Data and AI innovations and an anchor ofstability for the integrity of the financial system.
6. The speed of innovation increasingly tests the limits of the regulatory framework’s
adaptability. A level playing field in the age of Big Data and AI means that the speed ofinnovation has to be met with agile oversight and technology-neutral regulation.
United Kingdom
In 2017/18 the FCA worked with ING, the Commonwealth Bank of Australia and Pinsent
Masons to test the possibilities of using Natural Processing Language and AI technologies
to interpret Markets in Financial Instruments Directive II regulations and automatically build
and manage a compliance programme.
85.
Different entities: Supervisors will also need to deal with non-incumbent firms withdifferent entity structures and approaches to consumer related risk than incumbents.
Supervisors will need to engage with new entrants into insurance and financial services who
may not have experience or knowledge of financial services regulation. These new entrants
may have different entity structures and approaches to consumer related risk than incumbents
historically monitored by supervisors. Unlike incumbents, the general compliance awareness,risk culture and ability to comply with regulatory requirements may differ significantly for these
non-traditional firms. This may require a proactive strategy for outreach and engagement withthese new entrants to inform and “educate” them on relevant supervisory matters and the propercompliance attitude.
86.
Well capitalised “BigTech” platform businesses may move into distribution markets.
Small, nimble but lowly capitalised Insurtech start-ups may also look to enter insurance markets.
Supervisors will need to understand the different challenges posed by these new entities that
may lack knowledge of regulatory reuqirements, and may not have had experience in engaging
with supervisors.
87.
Supervisory cooperation: Cooperation between financial supervisory authorities is
crucial in a digitalised world. As digital innovations and risks do not stop at the border,
jurisdictional supervisors should coordinate with authorities in other jurisdictions. To meet thesechallenges supervisors should proactively work together across jurisdictional and subject-matterboundaries to identify emerging trends and to develop and implement solutions. This includes
collaboration between market conduct regulators and prudential, privacy and competition
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regulators given the implications of digital technology on consumer outcomes and the significant
number of solutions that are focused on the marketing, sales and distribution end of the value
chain. Regular and on-going interaction between supervisors will be crucial. The IAIS continues
to support and facilitate such discussions, including through its FinTech Forum.
FranceIn 2018, the ACPR signed an agreement with the authority supervising the security ofInformation Systems (ANSSI). The authority is responsible for responding to threats targeting
public authorities and the private sector, in particular vital information systems, andcoordinates government action in the area of defence of those systems.
88.
Regulatory arbitrage: Supervisors also need to be cognisant of the emergence of
product types that have the effect of insurance but are structured in a way that falls outside thelegal definition of a regulated insurance product. This would enable product providers to avoid
regulatory requirements. To consumers, it means that they would not be able to accesscompensation or policyholder protection schemes if product manufacturers are unable to meettheir claim costs.
89.

The arbitrage can take two forms:•

Jurisdictional: where the product falls outside the jurisdictional power of a regulator despite
being available to customers in that jurisdiction; and•Definitional: where the product does not have the legal characteristics of an insurance
product although it has the effects of one.

90.
In addition, digitalisation and new technologies may increase the potential for regulatory
arbitrage created by products that bundle insurance and non-insurance products or services
with choice by the consumer limited to purchasing or not purchasing the package.
91.
Information security: Storage, protection and third party use of customer data (and theinsights gathered from it) is also an issue. As cyber risks and data protection questions becomeof vital importance, with the steady rise of digitalisation, working together with the competentauthorities on these issues is of utmost importance.
World-wide
The "WannaCry" and “Petya” ransomware outbreaks in 2016 highlight that cyber risks areon the rise. The data and customer specific behavioural insights that insurers hold would
have a high value in this context. This is particularly relevant given that in order to drive
efficiencies and reduce costs, many insurers now store data and insights on the "cloud" andshare data and insights with third parties, many of whom are off-shore. Cloud services areprobably more in the focus of hackers but are in most cases much better protected than onpremise installations run by incumbents. On the other hand if a cloud service is successfully
attacked, the outcomes can be worse or even systemic.
92.
Customers need to know that their data and insights specific to them that are derived
from their data are secure, not corrupted or tainted, and clearly who has access to such data.
This is a challenge not just to privacy regulators but also to financial services regulators.

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EU
The EU has reformed its data protection rules to simplify the use of Big Data for businesses 26
and to set high standards of data protection. As of May 2018, with the entry into applicationof the General Data Protection Regulation 27, there is one set of data protection rules for allcompanies operating in the EU, wherever they are based. 28
Also, the EU aims to strengthen its cybersecurity regulation to cope with the growing threatof cyberattacks and take advantage of the opportunities offered by the new digital era. In
October 2017, the European Council called for a common approach to cybersecurity in linewith the European Commission's September reform package. 29
United States
The NAIC's Big Data Working Group is charged, in part, with reviewing current regulatory
frameworks used to oversee insurers' use of consumer and non-insurance data and, if
appropriate, recommend modifications to model laws and/or regulations regarding marketing,rating, underwriting and claims, regulation of data vendors and brokers, regulatory reporting
requirements, and consumer disclosure requirements.
93.
Use of cloud computing is increasing in the insurance industry, and with it the need forsupervisors to enhance their regulatory frameworks and supervisory practices to effectively
capture the risks. Most supervisors typically apply existing frameworks on outsourcing,governance, risk management, internal control, and information security to insurers’ cloudcomputing activities, while others have issued cloud-specific recommendations andexpectations. Meanwhile, most authorities have put in place formal and informal communication
arrangements and are reinforcing their supervisory processes to better monitor and assess therisks of cloud computing. 30
94.

Cloud services give rise to specific questions. For example:•

In which country will the data be stored and how can this be verified?

•

Who has access to the data?

•

Which key controls will be provided?

•

Is there a danger of risk concentration as there are not so many cloud service providers?

•

Is there a (possible) conflict of interest if data of different insurers are stored on the same
server?

Information Commissioner's Office: "Big data, artificial intelligence, machine learning and dataprotection", 20170904, Version: 2.2.
27 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on theprotection of natural persons with regard to the processing of personal data and on the free movement ofsuch data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016,p. 1).
28European
Commission:
https://ec.europa.eu/info/law/law-topic/data-protection/reform/what-doesgeneral-data-protection-regulation-gdpr-govern_en#references.
29 http://www.consilium.europa.eu/en/policies
30 FSI Insights, Emerging prudential approaches on outsourcing to the cloud: the case of insurancecompanies, forthcoming.
26

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•Is there a (possible) conflict of interest if the cloud service provider decides to involve
itself in the insurance business?

95.
It is also vital that supervisors have the same direct and immediate access to data stored
on the cloud as they have to data stored on an insurer or intermediaries own servers.
Germany
BaFin published in its Journal 04/2018 an article on “Cloud Computing: Compliance with thesupervisory requirements regarding rights of information and audit and ability to monitor”. 31
With regard to outsourcing to cloud service providers, BaFin also holds discussions with therespective cloud service providers and insurers about the content of outsourcing contracts.
A circular to clarify supervisory requirements for IT in insurers (VAIT) has been published(https://www.bafin.de/SharedDocs/Downloads/DE/Rundschreiben/dl_rs_1810_vait_va.html).

31

https://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Fachartikel/2018/fa_bj_1804_Cloud_Comput
ing_en.html.
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5Conclusion and recommendations

96.
Digital innovations can change and potentially improve the customer experience andreduce insurers’ and intermediaries’ operating costs. However, digitalisation may have an
impact on consumer protection and the extent to which customers are treated fairly; from thedesign, underwriting and pricing of products, their marketing and distribution, through to claims
processing and the ongoing management of customers. Therefore, in respect of product design,
marketing and sales, due attention needs to be given to achieving fair customer outcomes interms of products that meet consumers’ needs, the design and use of algorithms and the useof customer data.
97.
To adjust to the digital age and foster innovation, supervisors should consider how toensure that new innovation does not come at the expense of protections for policyholders andthe integrity of the insurance sector as a whole.
98.
One of the key challenges to supervisors will be to consider a balanced approach tofacilitate innovations by insurers while maintaining the level of consumer protection as stipulated
in its laws and regulations. To promote innovation consistent with consumer benefit andprotection, it is recommended that supervisors develop a thorough understanding of how
innovations work and are applied to ensure a proper assessment of new products and businessmodels, and the design and functioning of the IT architecture, infrastructures and processes,
and how this is catered for in the insurers’ risk management framework.
99.
Supervisors may also need to develop new tools and skills for supervision of digitalised
insurers, enhancing cooperation with financial and other authorities, safeguarding thesupervisory perimeter to prevent regulatory arbitrage and enhancing information security.
100. Supported by further material to be developed by the IAIS, supervisors should consider
establishing guidance for appropriate and responsible use of new technologies to safeguard thefair treatment of customers and – for example in terms of the use of AI and robo advice
mechanisms – promote advice and services that are suitable and affordable for the customers.

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Annex: Digital technologies and alternative business models affecting
insurance business
General overview of significant innovations within the insurance industry as mentioned in the
IAIS report “FinTech Innovations in the Insurance Industry”. 32
Digital devices and the internet:
1. The changes addressed in this paper are facilitated by the proliferation of digital devices(devices that contain a computer or microcontroller) such as smartphones, tablets and"wearables". These devices are connected by the internet: a global network of computers
using standardised communication protocols.
Internet of Things (IoT): 33
2. IoT involves the internetworking of physical devices, vehicles, buildings and other items(also referred to as "connected devices" and "smart devices"), embedded with electronics,
software, sensors, actuators, and network connectivity that enable these objects to collectand exchange data.
Telematics / Telemetry:
3. In the context of IoT, telematics involves telecommunications, sensors and computerscience to allow sending, receiving, storing and processing data via telecommunication
devices, affecting or not control on remote objects. Telemetry involves the transmission of
measurements from the location of origin to the location of computing and consumption,
especially without affecting control on the remote objects. In the context of insurance, its
main applications are Connected Cars, Advanced Driver Assistance Systems (ADAS),
Health monitoring and Home monitoring.
Big Data 34 and Data Analytics: 35
4. In the insurance market, Big Data and Data Analytics could be used in various processes,
such as product offerings, risk selection, pricing, cross selling, claims prediction and fraud
detection, for example to offer customised products.
Comparators and Robo advisers:
5. Online services that provide automated, algorithm-based product comparison and advice
without human intervention.

32

21 February 2017; https://www.iaisweb.org/page/news/other-papers-and-reports/file/65625/report-on-fintechdevelopments-in-the-insurance-industry
33 The term IoT has been defined as a global infrastructure for the information society, enabling advanced services
by interconnecting (physical and virtual) things based on existing and evolving interoperable information andcommunication technologies (source http://www.itu.int/ITU-T/recommendations/rec.aspx?rec=y.2060)
34 Big Data is the term used for the storage of data from different sources, in large volume and speed; IAIS, FinTech
Developments in the Insurance Industry, 21 February 2017.
35 Data Analytics is the process of inspecting, cleaning, transforming, and modelling data with the goal of discovering
useful information, suggesting conclusions, and supporting decision-making; IAIS, FinTech Developments in the
Insurance Industry, 21 February 2017.
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Machine Learning (ML) and Artificial Intelligence (AI):
6. The use of ML and AI enables several insurance industry processes to use data in real timeand, especially, use events prediction (eg vehicles thefts, health problems and weather
events). There is a vast scope for AI, not only in a better pricing of risks, but also in fraud
prevention, automated underwriting, claims handling or in preventive counselling.
Distributed Ledger Technology (DLT):
7. A distributed ledger is essentially an asset database that can be shared across a networkof multiple sites, geographies or institutions. The security and accuracy of the assets stored
in the ledger are maintained cryptographically through the use of “keys” and signatures tocontrol who did what within the shared ledger.
••

Blockchain:This is a type of decentralised distributed ledger, comprised of unchangeable, digitally
recorded data in packages called “blocks” which are stored in a linear chain; andSmart Contracts:
The novelty of DLT is that it is more than just a database – it can also set rules about atransaction (business logic) that are tied to the transaction itself. Smart contract is a term
used to describe computer programme code that is capable of facilitating, executing,and enforcing the negotiation or performance of an agreement using DLT.

Platform business models, Peer-to-peer, Usage Based, On-demand Insurance:
8. Emerging digital technologies are facilitating alternative business models, such as:
•

•

•

•

Platform business models: a "platform" is a business model that creates value byfacilitating exchanges between two or more independent groups, usually consumers andproducers. To make these exchanges happen, platforms harness and create large,
rapidly scalable networks of users and resources. Platforms don't own the means of
production – instead they create the means of connection. 36 Google, Apple, Facebook,
Amazon, Uber and Alibaba are all examples of platform business models;Peer-to-Peer: a business model that allows the insured to pool their capital, self-organiseand self-administer their own insurance. Although it is not an innovative concept,
emerging technologies (like DLT) offer substantial benefits for implementing this modelin a broader scale;
Usage based insurance: a new business model introduced by insurers andintermediaries that more closely aligns behaviours with premium rates. For example, in
auto insurance there are usage based insurance products where the customer only pays
for the actual distance driven and driver behaviours also impact price; andOn-demand insurance: a new business model that specialises in covering only thoserisks faced at a certain moment.

36 https://www.applicoinc.com/blog/what-is-a-platform-business-model/ (accessed 2 January 2018)

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