Insurance innovation must not exclude vulnerable in society from protection

The Institute and Faculty of Actuaries (IFoA) is launching a series of bulletins exploring whether the insurance industry is providing products that are fit-for-purpose and do not penalise or exclude those most in need of protection. Although the industry is innovating to find new ways to address a fast-evolving landscape, the pace and breadth of change across a wide spectrum of risks is dramatic. These include changes in demographics, advances in technology and data collection, and extreme weather events amongst many others. The IFoA has brought together a group of industry experts to discuss how insurers, governments and regulators are responding to these challenges and opportunities.

The first bulletin ‘Drivers of Change’, investigates the societal, technological and macroeconomic drivers that are creating the need for change and their impact. It includes Citizens Advice discussing the so-called ‘loyalty penalty’ where loyal customers are penalised for not shopping around when their policy is due for renewal. The Social Market Foundation looks at Insurance Premium Tax, describing it as a regressive form of taxation which hits lowest income households the hardest. And IFoA members with direct experience in the insurance sector consider how the industry is grappling with innovations such as wearable technology and genetic testing.

David Heath, Chair of the IFoA Policy and Public Affairs Board, said:

“Insurance is designed to offer protection to individuals and businesses and it is important that the industry innovates and evolves to address changing needs. But it must seek to do so in a way that is fair and includes those needing protection the most.

“There are plenty of positive examples of new products and services on offer which are designed to provide cover for those who may previously have struggled to find it such as workers in the gig economy. But we are also seeing cases where the use of advanced technology, for example wearable technology and genetic testing, could reduce the risk pool and leave those at the margins without adequate protection or in some cases, no protection at all.

“Actuaries play a key role in the insurance sector and have a crucial part to play in considering whether sufficient emphasis is placed on protecting vulnerable consumers. These are people who may already find it challenging to find the most appropriate insurance cover at the right price.”

The remaining bulletins will be released later in 2020 with the second edition exploring the response from the industry, including interventions that have been implemented or proposed. The third and final bulletin will take an in-depth look at the role insurance plays in society, aiming to provide ensuring empowerment for all through protection.

~ENDS~

Contact
Sonia Sequeira, Media Relations Manager, IFoA
Tel: 07525 592 198
Email: sonia.sequeira@actuaries.org.uk

Notes to Editor

1. ‘Inclusive Insurance: Drivers of Change’. Institute and Faculty of Actuaries. June 2020.

About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest. 

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