15 November 2017 Insurance

Do regulators understand insurtech?

Across the industry, insurtech is the buzzword. Potential game-changers such as artificial intelligence and blockchain could irreversibly change the landscape.

And while the question being constantly asked is whether insurers are prepared, another question should be asked: do regulators understand the insurtech landscape?

“Some regulators do but some unfortunately do not,” said Neftalí Garro, partner at law firm BLP, who will be speaking on the subject of regulatory understanding on Monday, November 13 at 4:30pm.

“When one takes a look at all that is happening on the technological front, it is sometimes frustrating that regulators in our region sometimes still struggle with things such as electronic contracts and digital signatures,” Garro claimed.

That doesn’t mean regulators in the region aren’t sophisticated—some are already attempting to deepen their knowledge of these technologies and the issues faced.

For Garro, it’s key to bridge any gaps that may exist in that understanding by working hand-in-hand with the industry.

Many of these new technological developments are running up against laws and regulations that were thought of and adopted in the “brick and mortar” era of insurance.

“A trend towards modernising rules on distribution, alternative sales channels, and electronic contracts is something that began in our region, that the industry should support and on which it should work together with the regulators,” he said.

The future of the re/insurance industry is expected to dominate talk at the FIDES conference, including “trying to separate the fads and the noise from the actual trends and developments, and also seeing how the regulatory landscape helps or hinders those developments”.

But, according to Garro, because the industry is talking more about insurtech doesn’t mean that it is a new thing.

“Technological development in insurance, as in any field, is a constant and has always been. Perhaps the difference now is that science is on the verge of significant breakthroughs in technologies that could become game-changers,” he said.

Although many feel that re/insurers are “conservative and slow to adopt many of these changes”, that’s not a bad thing.

“As with anything in the field of science an innovation, trial and error is an integral part of getting from point A to point B,” said the partner.

One of the main drivers of the focus on insurtech is the ever-increasing amount of data that is available as part of the underwriting process, he explained.

Garro added that it is estimated that within a few years the processing power of a smartphone, measured in terms of calculations per second, will finally catch up with that of the human brain and that by 2050 it will reach the equivalent of that of the human race as a whole.

“Imagine what all that data combined with all that processing power will do for a data-driven industry such as insurance.”

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