IAIS Global Seminar 30 June 2017 Digitalisation in the Insurance Sector: Benefits and Risks to Consumers IAIS Global Seminar 30 June 2017

Panel: Moderator: Li Tang Vice Chair of the IAIS Implementation Committee; Director of Research, International Department, China Insurance Regulatory Commission (CIRC) Panellists: Stefan Claus, Technical Head, General Insurance Division, PRA, Bank of England Geeke Feiter, P&C Retail, NN Group Peter Kochenburger, Deputy Director, Insurance Law Center and Associate Clinical Professor of Law, University of Connecticut School of Law Peter Braad Olesen, Associate Principal, McKinsey & Company

Introduction IAIS Report “FinTech Developments in the Insurance Industry” (21 Feb. 2017): highlights the potential impact of innovative financial technologies (“FinTech”) on insurance sector competitiveness, consumer choice, interconnectedness, business model viability and regulatory oversight; examines the challenges and opportunities insurance supervisors. The reports analyses the potential impact based on three scenarios: Incumbents successfully maintaining the customer relationship. The fragmentation of the insurance value chain with incumbents no longer in control. Big technology firms squeezing out traditional insurers

Main conclusions from the scenario analysis Competitiveness: expected to reduce longer-term. Consumer choice: expected to reduce –extent varies for each scenario. Interconnectedness: potential for increased risk of interconnectedness arising from the use of a limited number of technology platforms. Ability for regulatory oversight: more participants in insurance value chain reducing the ability for regulatory oversight. Business model viability & prudential capital requirements: over longer term potential for a reduction in business model resilience. Conduct of business: more bespoke products expected; risk that products reflect firm’s objectives rather than consumer’s. Data ownership: increase in data collection and analysis; need for maintaining security of personal data and prevention of unauthorised access or processing So, what is the impact on consumers?