Emerging risks from new technology in insurance and ways to mitigate them

Updated: April 4, 2019 1:30:35 PM

While technological innovations simplifies the process of securing new insurance policies, there are some potential risks that one could be exposed to.

Insurtech , Fintech, insurers , Insurance , insurance policies, technologyThere are safeguards build through regulatory controls and approvals on use of customer data.

As consumers become more discerning, expectations of seamless and instant transactions across digital channels are increasingly becoming the norm.

Similar to ‘Fintech’, ‘Insurtech’ is a term used for technology-led companies that have revolutionized the way the insurance sector in India functions. Insurance companies take support of the available new technologies in the market to provide solutions for today’s more digitally savvy customer base. ‘Insurtech’ is becoming an industry-wide solution, with insurers actively participating in this revolution through accelerators, investments in technology, innovation labs and in a variety of other ways.

While disruptive technology is a much needed and welcoming move in the industry, it inevitably exposes companies to  new and high risks. While technological innovations simplifies the process of securing new insurance policies. There are some potential risks that consumers could be exposed to.

We need to know these risks so that it can be addressed – when attacked.

How policyholders can keep hackers at bay
Whenever we share or store personal information online, there are risks associated with hackers. Hackers can infiltrate critical IoTs systems that could lead to loss or misuse of personal information. They can also tamper with algorithms that can lead to the system taking wrong decisions. An approach to mitigate this is to ensure that enough security controls are implemented by insurers that are monitored frequently.

Further, consumers must be cautious of using their PII (personally identifiable information) on public Wi-Fi, or using easy passwords or identical passwords across accounts which are vulnerable for attack by hackers.

Be Judicious with consent given to use personal data or acknowledgment to ‘T&C’ Policies.

Unlike FMCG goods, insurance isn’t a daily purchase commodity. As it is a one-time finance related purchase, it is important that we properly understand the risk associated with purchasing the policies using the emerging technology. Insurtech has definitely reduced the time and costs involved in purchasing insurance products but one has to be observant that our precious data is not used anywhere without our consent. Be cautious on the consents given to T&C (terms and conditions).

For example:

  • The T&C may be shared as a hyperlink which the consumer should carefully read before giving their consent.
  • General consent may be taken without explaining how & with whom the data is being shared or used for.
  • Shortened T&C may not give enough clarity.

However, there are safeguards build through regulatory controls and approvals on use of customer data.

Take help of your insurer
With evolving technology, we have apps and smart bots which can converse with customers and give real-time advice on products and policies. Insurance policies can be issued within a few hours with just a few clicks. However, not all customers are well versed with evolving technologies and may not understand the process well. In this scenario, Insurers must step in and handhold consumers on using new age technologies and by providing a simpler user interface.

In conclusion, the insurance industry is at the cusp of a revolution with ton of ways for insurance companies to leverage technology to become more efficient and effective. The sector has leapfrogged with insurers coming up with tailor-made solutions and round the clock support systems to assist customers in the best possible ways. With advanced risk assessment and mitigation processes facilitated by ’Insurtech’ that are aided with emerging technologies, customers can expect much more flexibility and security from their insurance products.

(By Bikash Choudhary, Appointed Actuary and Chief Risk Officer, Future Generali India Life Insurance Company Limited)

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