Insurers facing data protection trouble
Some insurers are implementing only the
minimum data protection standards as
required in a jurisdiction—but this approach will
cause problems for them, according to Darren
Wray, CEO of consultancy firm Fifth Step.
In preparation for the implementation of the
onerous General Data Protection Regulation
(GDPR) in Europe in May 2018, a number of
global insurers have opted to adhere to arguably
lower required standards in other jurisdictions
such as Bermuda or the US, Wray said.
This may help insurers reduce costs.
However, at the same time, this lowers their
ability to be flexible to send and process data
elsewhere, where data protection rules are less
While it may be best for global insurers
to have few data locations to allow for the
efficient management of data, this is becoming
increasingly difficult as countries such as Russia
and China are pushing to keep data concerning
their citizens within the country.
Organisations in breach of GDPR will
face significant penalties. Companies can
be fined up to 4 percent of annual global
turnover, or €20 million ($24 million), whichever
is greater. Arguably the biggest change to the
regulatory landscape of data privacy comes
with the extended jurisdiction of the GDPR,
as it applies to all companies processing the
personal data of data subjects residing in the
EU, regardless of the company’s location.
Many organisations based outside Europe
have very little understanding of the GDPR
requirements and if they have data breaches with
European data they will incur big fines, Wray said.
Among challenges insurers face while
preparing for GDPR is understanding the
nature and the scope of what personal data
is, he explained. The new regulation includes,
for example, genetic information such as used
in biometrics for identifying people through
fingerprints or iris scans.
Such data are now deemed personal sensitive
information. The new regulation also considers IP
addresses as personal information. Organisations
which are collecting IP addresses on their website
logs, for example, need to treat that as personal
information and ensure that it is protected.
Location data is another aspect causing
organisations trouble as they prepare for GDPR.
Many firms provide mobile phones to staff and
these provide the ability to be tracked. That
information is understood as personal information
under GDPR and has to be locked down; it can’t
be shared, and can’t be used for a purpose other
than what it is stated for, Wray said.
“The biggest challenge is coming down to
the fact that organisations have left it a bit late,”
Wray said. n
Fourth industrial revolution will transform insurance value chain
The advent of artificial intelligence (AI),
the Internet of Things, robotics and big
data is transforming global economic systems
and, in turn, revolutionising risk assessment
and underwriting through the use of machine
learning algorithms, Tim Yeates, managing
director of Axco, told Monte Carlo Today.
“We’re no longer talking about digital
strategy, we’re talking about strategy in a digital
world,” Yeates said.
“The fourth industrial revolution is an
increasingly digital world. It is connecting machines,
but it is fundamentally moving knowledge, data
and information from anywhere in the world.”
Axco provides market intelligence to the
re/insurance market, and has released a white
paper on the impact of the ‘fourth industrial
revolution’ on insurance.
Yeates believes the digitisation of insurance
will increase efficiencies and the affordability
of the product for smaller firms, as well as
insurance penetration in emerging markets.
Advanced imaging technology, for example
remote sensing satellites orbiting the Earth,
have increased in resolution exponentially,
which in turn has become an integrated part of
risk assessment. This can be seen with Munich
Re’s NATHAN (Natural Hazards Assessment
Real-time data and machine learning can
now facilitate live premium readjustments
of claims forecasts based on the outcomes of
different scenarios, the white paper stated.
Furthermore, the report claims the
digitisation of insurance underwriting may
reduce back office costs and contribute to a
lower combined ratio, and the claims ratio may
be improved by the reduction of costs.
In the longer term, Yeates sees AI, machine
learning and predictive analytics enabling
underwriters to quick capture patterns in large
sets of unstructured data.
He believes this revolution is already
“There are very substantial insurtech
insurers already in play, being heavily financed
to grow fast,” Yeates said.
“There are very large traditional insurers
who have advanced strategies surrounding
insurtech, predictive analytics and big data.
These are becoming increasingly commonplace
in the market.” n
28 | MONTE CARLO TODAY | DAY 4: Wednesday September 13 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com