The Promise and Perils of Insurtech

Abstract

The insurance sector, in riding the wave of the FinTech phenomenon, has been rapidly expanding,with a slew of firms having emerged to provide so-called “InsurTech” services. These services incorporate concepts such as blockchain, artificial intelligence, digitalisation and the sharing economy to various aspects of the insurance industry. This profusion of technology brings with it the promise of various benefits including increasing efficiency and lowering costs for not only insurers and intermediaries, but also businesses or consumers as end-users of insurance. However, the development of InsurTech comes with corresponding risks and regulatory concerns not currently accounted for by the traditional regulatory model. This paper will examine potential risks associated with the application of InsurTech and scope out how current regulations might hinder (rather than facilitate) the development of InsurTech. This paper then concludes with a discussion of various possible responses or regulatory approaches to InsurTech applications.