U.S. GAO published a report that examines the benefits and challenges presented by innovative use of technology by insurers. The report identifies new uses of technologies and examines potential benefits and challenges of these technologies for insurers, consumers, and regulators. The report also discusses what stakeholders identified as key challenges that could affect the adoption of new technologies and actions taken to address those challenges.
GAO was asked to provide information on insurtech activities in the property and casualty and life insurance sectors. GAO reviewed available literature, analyzed relevant laws and regulations, and conducted interviews with more than 35 stakeholders, including federal and state regulators, technology companies, insurers, and consumer groups. Stakeholders with whom GAO spoke identified challenges that might affect adoption of innovative technologies. Some stakeholders have raised questions about how certain uses of insurtech could create both risks for consumers and challenges for regulators; another concern is that some of the challenges might slow technological innovation in the insurance sector. The identified challenges include paper-based documentation requirements that do not accommodate online insurance transactions and challenges for regulators in the evaluation of complex rating models.
The National Association of Insurance Commissioners (NAIC), state regulators, and others have initiated a number of actions designed to address industry and regulator concerns associated with insurtech, including any insurance rules and regulations that could affect insurers’ adoption of technologies. Since many of these regulatory initiatives are still in development (or recently developed), their effect on innovation and consumer protection is unknown. It will be important for NAIC and state insurance regulators, as well as the Federal Insurance Office, to continue monitoring developments in these areas. The actions taken by these entities address challenges in areas including evaluation of underwriting methodologies, approvals for new insurance products, customer notification methods and time frames, anti-rebating laws, cyber-security, and regulator skillsets and resources. The following are some examples of the actions that have been initiated:
- State insurance regulators, through an NAIC task force, have been examining regulatory areas that may pose obstacles for innovation, such as requirements for paper documentation or signatures.
- NAIC issued draft best practices for states to use when reviewing complex rating models.
- NAIC adopted a model law that creates a legal framework for states to use to require insurance companies to operate cyber-security programs and protect consumer data.
Specifically, NAIC adopted a model law and states have passed new laws governing cyber-security and data protection to safeguard the increasing amount of personal data used by insurers. In 2017, NAIC had approved the Insurance Data Security Model Law, which outlines planned cyber-security testing, creation of an information security program, and incident response plans for breach notification procedures. The NAIC model law is only a guideline until adopted by individual states, but NAIC noted that in 2018 and 2019, Michigan, Ohio, Mississippi, and Alabama adopted laws based on the NAIC model and additional states have pending legislation.
Keywords: Americas, US, Insurance, Insurtech, Artificial Intelligence, Cyber Risk, Cyber Security, GAO
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).