IAIS is seeking feedback on the draft Issues Paper on the use of big data analytics in insurance. The paper focuses on the use of algorithms and advanced analytics capabilities by insurers to make decisions based on patterns, trends, and linkages and examines the availability of new alternative data sources (collectively referred to as big data analytics) to insurers. The paper builds on the IAIS Issues Paper (published in November 2018) on the increasing digitalization in insurance and the potential impact of this digitalization on consumer outcomes by focusing more on issues related to the use of personal and other data by insurers. Feedback on this consultative document is invited by October 16, 2019.
To help understand the potential benefits and risks to consumers associated with the use of big data analytics by insurers, the paper considers the manner in which insurers are now able to collect, process, and use data across various stages of the insurance product lifecycle, namely product design, marketing, sales and distribution, pricing and underwriting, and claims handling. The paper also makes certain observations about the potential implications of the use of big data analytics in insurance, for supervisors. Furthermore, in light of the outcomes for the fair treatment of customers described in the Insurance Core Principles (ICPs) 18 and 19, this paper makes certain observations about the potential implications for supervisors as a result of the use of big data analytics in insurance.
The paper observes that the increased availability of data and enhanced processing capabilities now accessible to insurers can result in a number of benefits. On the other hand, the paper also highlights that the complexity and opacity of algorithm technology and the ability of insurers to customize product offerings to an individual level could potentially result in risks to individual customers as well as to the insurance sector, for which supervisors may need to devise appropriate responses. Additionally, the paper suggests that supervisors think about whether there is a need to enhance governance, oversight, and third-party risk management requirements specific to the use of algorithms for big data analytics purposes.
Comment Due Date: October 16, 2019
Keywords: International, Insurance, BDA, Big Data, ICPs, Suptech, Insurtech, IAIS
BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.
BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.
APRA published the updated reporting standards and guidance for the collection of Economic and Financial Statistics (EFS), following a consultation process. Also published was a response letter to the feedback received on the proposal for amending the EFS reporting standards and guidance.
EC is consulting on a draft delegated regulation to supplement the Taxonomy Regulation (2020/852) by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as environmentally sustainable.
The IFRS Foundation published material highlighting the ways in which existing requirements in IFRS standards require companies to consider climate-related matters when their effect is material to the financial statements.
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.