The Insurance Development Forum (IDF), has issued a rallying cry to the industry over its efforts to bridge the growing protection gap.
The public/private partnership led by the insurance industry and supported by the United Nations, World Bank and other leading international organisations, has told underwriters the ability to harness the latest technological advances in data collection will help efforts to close the protection gap at the micro-level.
The call for action coincides with the publication of the IDF’s latest report, Technology and Innovation: Tools to help close the Protection Gap in Microinsurance Markets. The paper highlights how technology can be used to develop and deliver insurance solutions to address the unique issues faced by populations in the lower and emerging middle-classes of the economic spectrum.
Ekhosuehi Iyahen, Secretary General of the Insurance Development Forum, explained: “There are great social, economic, and humanitarian benefits to be gained by increasing access to insurance at the micro-level – particularly in developing countries. And yet the protection gap at the micro-level remains immense, and progress in closing it has only been incremental to date.
“The impact of climate change is ever growing, and with it, so is the protection gap. Those in emerging markets are at an even greater risk when it comes to the detrimental effects of climate change, and as a result, it has never been more important to come together to build resilience. With such opportunities presented from both new and existing technology, there is undoubtedly tremendous scope for the insurance sector to help close the protection gap that exists at the micro-insurance level and in both developed and developing markets. Real progress in this area will depend on using technology positively to meet individual market needs, and we hope this paper helps demonstrate how this can be achieved.”
Led by the IDF’s working group on Law, Regulation and Resilience Policies, and developed in collaboration with global law firm Clyde & Co, the whitepaper explores the latest advancements in data processing, analytics and artificial intelligence.
The publication explore a range of issues and solutions, from using satellite data for parametric insurance models in agriculture, to improving disaster warning communications, and even connecting with unbanked consumers through mobile platforms.
In light of these technological developments, the report also includes a review of current laws and regulations, and how these could be adapted to ensure they are fit for purpose. Technology and Innovation: Tools to help close the Protection Gap in Microinsurance Markets, draws from the insights of a cross disciplinary and global team of contributors, including leading lawyers and academics on insurance law and smart contracts, senior members of the insurance industry, senior personnel at multilateral development banks, development practitioners and policymakers, alongside leading thinkers and practitioners in artificial intelligence and satellite technology applications.
Bill Marcoux, Chair, IDF Law, Regulation and Resilient Policies Working Group, said: “There are great economic and humanitarian benefits in increasing access to insurance in developing countries. What we have seen from our research is that technology can extend the reach of insurers, enabling better product design, more accurate pricing of risk, reducing distribution costs, increasing the speed and ease of claims settlements, and even assist in fraud detection.
“Technology is not a solution itself, it is a tool, and when used correctly, it can be a vital means to address the insurance requirements of those who require greater protection and support from the insurance sector. Within the report we reflect on the role of insurance regulation and the necessary evolution that must take place to accommodate and appropriately regulate Insurtech and other technological innovations. Considerable work still needs to be done to provide regulators with the appropriate resources, skills and support to drive progress in this space, which is why we make note of some of the emerging innovative regulatory responses throughout the paper.”