Access to financial services for families: debate on drivers of insurance in coming decade

On the 4th of December, ICMIF (International Cooperative and Mutual Insurance Federation) and AMICE (Association of Mutual Insurers and Insurance Cooperatives in Europe) jointly held their 3rd stakeholder’s dialogue around regulatory affairs of the insurance business. The conference aimed at discussing the drivers of change in the insurance business in the next decade. The conference touched on a variety of topics broken down into four panel sessions: better regulation, sustainability and long term thinking, the insurance business adapting to change, and digitalisation and ethical issues in insurance.

Martin Schmalzried was invited to represent COFACE-Families Europe and discuss the key drivers of change for insurance in the coming decade. Among the points put forward:

  • COFACE-Families Europe is very attached to the element of solidarity. The insurance business, and especially mutualities and cooperative insurance companies, very much embody such a principle via the socialisation of risk. This principle will have to be upheld and reinforced in the future if the insurance sector is to remain relevant in the coming decade.
  • Competition in the insurance business and the growing use of artificial intelligence (AI) coupled with the availability of big data exerts tremendous pressure on the traditional insurance business. With more data, sophisticated AI software can develop more granular risk analyses, identifying the “less risky” clients and thereby proposing attractive, personalized insurance products. This exerts pressure on the other market players which are forced to align with the latest technological developments or face the risk of being left with the most risky clients which would drive them out of business.
  • At this point in time, we find ourselves at a key crossroad between two main options: the first one where we stick to personal liability and the assumption of 100% free will, the second one where we recognize, as a society, that external factors, the environment, the general context, exerts an influence on human behaviour.
  • Under the first assumption, the insurance of the future would become more and more personalized, punishing people who behave in a “risky” way as identified by an AI. We can see the premises of this option in the growing surveillance state put in place by the Chinese and their social scoring system. In essence, it would be a society where an AI would watch if every individual brushes their teeth three times a day via a connected tooth brush, monitors what people eat via a connected fridge, monitors how much people move with connected watches, and if one fails to live up to a “standard” of good health, one would see his/her insurance premium increase, or be excluded from access to insurance altogether. This would be the worst case scenario.
  • Under the second assumption, AI could be used to identify key risk factors outside of the control of individuals. For instance, checking the impact on human behaviour of being exposed to advertising which promotes unhealthy lifestyles or products, checking whether putting in place innovative work place environments which mandate every employer to provide daily hourly credits for sports and physical activity to their staff helps prevent certain health issues like back problems, or even checking whether there is a correlation between cancer rates and the use of pesticides and exposure to radiation (cell phones, wifi…). In this scenario, AI would not be used to punish individuals but to inform policy makers to shape environments in such a way as to minimize risk. Insurance companies could therefore become a form of officially recognized “whistle blowers”, mandated by the government to inform them on risk factors and facilitating the justification and rationale for better policy making.
  • COFACE-Families Europe is favorable to legislation which cements more deeply the principle of risk socialization in insurance, and proposes that for essential insurance products which are necessary for the daily lives of individuals in order to be included in society, regulatory measures are put in place to clarify what data is strictly necessary to carry out responsible and fair risk assessments which does not exclude certain categories of people. These products include: mortgage credit insurance, health insurance, car insurance, family insurance, personal home insurance (fire, flood…) The GDPR provides a legal basis on which such regulations can rest. As an example, a person which has suffered from cancer is often excluded from accessing such insurances as a mortgage credit insurance in many countries. Measures need to be put in place to allow these people to afford such an insurance, either via a forced socialization of risk with the “healthy” population, or via a system of public subsidies such as the AERAS convention in France.

For more information, visit the official website of the event here:
Or contact Martin Schmalzried :

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